I. R&D Spending a. Such a treaty would likely increase R&D spending since appropriability would increase. b. Increase in R&D and in output growth. c. A decrease in the fertility of applied research; a (small) decrease in growth. d. A decrease in the appropriability of drug research. A drop in the development of new drugs. Lower technological progress and lower growth. 2. Patents and Growth Technological progress comes partly from innovation where the driving force is a desire to make money from inventions and partly from innovations driven by human curiosity that is pure research. In developing countries, there is likely to be significant technology transfer from developed countries. A developing country may choose poor patent protection to avoid paying royalties to patent holders in developed countries. It depends on your definition of danger. IN an extreme case, developed countries could refuse to trade with a patent-violator and other gais fro trade and investment may be given up. It is not obvious that this has occurred.
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