Intellectual property rights and environmental regulation: determining FDI in Asia and Latin America?
Student name: Ms Shivani Arun
Guide: Dr Kavita Sardana
Year of completion: 2015
Host Organisation: TERI University
Abstract: This paper aims to analyze the impact of intellectual property rights regime (IPR) and
environmental regulation on inward foreign direct investment (FDI) from the United States (US)
to 18 Asian and Latin American countries over the period 1995-2005. Intellectual property rights
regime and environmental regulation are two factors that are extensively debated in literature on
determining the potential for technology transfer and hence, future growth of these countries.
Since FDI represents a medium of technology transfer, a further exploration of significance of
these factors is warranted.
The findings suggest that the impact of intellectual property rights regime on FDI is conditional
on the institutional quality of a country. However, this cannot be deduced for the case of
environmental regulation. Given the problems associated with measuring environmental
regulation, an Environmental Participation Index is constructed on basis of countries
participation in International Environmental Agreements (IEAs), which aims at comparing both
the policy and its‘ de jure enforcement. It is found that environmental participation doesn‘t have
any significant influence on foreign direct investment. Credibility of environmental regulation
stringency can only be established by means of concrete pollution abatement measures
undertaken by industries in the country.
Key words: Intellectual Property Rights, Environmental Participation Index, Foreign Direct
Investment, Institutional quality
