The impact of density, distance and division on intellectual property rights protection: the case of Huaihai Economic Zone, China

Abstract

ABSTRACT Although intellectual property rights (IPRs) protection is often discussed at national level, it may also present spatial difference at sub-national level due to regional economic development inequality in geographic space. The paper explores the empirical impact of 3Ds (Density, Distances and Division) framework of the 2009 World Development Report on spatial heterogeneity of IPRs protection within 20 cities in Huaihai Economic Zone (HEZ), China. Endogeneity and spatial effect issues are discussed in the study. This study not only employs OLS to examine the effects of spatial heterogeneity on IPRs protection, but also uses two-stage least squares regression (2SLS) and spatial effects to address endogeneity and neighbour issues respectively. Econometric results indicate that distance plays an important role in disparities of IPRs protection, especially distances to provincial capitals. However, the role of Xuzhou, the central city of HEZ, is not highlighted. The positive effect of density can help us understand IPRs protection and its significant role proves the existence of agglomeration, but due to the small sample size, we have to treat its effect carefully. Meanwhile, the results on division demonstrate the negative impact of foreign direct investment (FDI) and the existence of low quality FDI in Huaihai Economic Zone. In addition, the above conclusions continue to be held by interaction variables, and time dummies indicate that HEZ has been committed to the development of IPRs protection in recent years. Finally, these results have a strong policy implication for economic agglomeration, economic integration and central city development in HEZ.