WASHINGTON, D.C., March 15 -- A new study by the International Finance Corporation (IFC) presents the first practical evidence on the relationship between foreign direct investment and a country's system of intellectual property1 rights (IPR) protection. The paper concludes that a developing country's intellectual property rights could have a substantial effect on the volume of foreign direct investment inflows and the kinds of technology transferred by U.S. firms to that country and argues that, if a country's intellectual property rights protection is weak, it is less likely to attract joint venture partnerships or high-tech transfers. The study is titled Intellectual Property Protection, Foreign Direct Investment, and Technology Transfer (Discussion Paper 19) and is based on a research project by IFC's Economics Department. The paper is backed up by survey data, interview studies, and statistical analysis, and is written by Edwin Mansfield, director of the Center for Economics and Technology and Professor
of Economics at Pennsylvania University. Mansfield chose a random sample of 100 major U.S. firms in six manufacturing industries -- chemicals (including pharmaceuticals), transportation equipment, electrical equipment, machinery, food, and metals. The firms pointed out 16 developing countries where, in their view, intellectual property rights protection was weak. They were then asked if they would establish joint ventures in those countries, be willing to transfer their newest or most effective technology, or permit licensing of their technology. Many of the conclusions are based on the responses by the firms and their unwillingness or otherwise to invest in those countries because of perceived weak intellectual property rights protection. IFC is a member of the World Bank Group and is the largest multilateral source of equity and loan financing for private sector projects in developing countries. (30) Note to Editors: To obtain a copy of this publication, please call (202) 473-3397 or fax 202-676-0365. 1 Int
ellectual property consists chiefly of patents, copyrights, trademarks, and trade secrets.
