Intellectual Property Rights as an Instrument of Foreign Direct Investment Promotion:

the case of Mozambican intellectual property system

Abstract

This study explores the relationship between intellectual property rights (IPR) and foreign direct investment (FDI) in the context of Mozambique’s economic development. The theoretical framework examines the role of IPR as instruments of public policy and the impact of strong or weak IPR protection on FDI. It considers two opposing theories: the IPR Theory, which suggests that strong IPR protection, incentivizes FDI by providing a secure environment for intellectual asset protection, and the Technology Diffusion Theory,which argues that weak IPR promote technology transfer and attract FDI by reducing costs.The case study of Mozambique is chosen to understand the interplay between IPR, FDI,and economic development. The contention posits that in the case of Mozambique’s dependency on the extractive sector, IPR exert a diminished influence on FDI attraction compared to the pronounced impact of natural resources. Conversely, in developed nations characterized by a knowledge-based economy, the significance of IPR becomes pivotal in shaping and enhancing the attraction of FDI. Nevertheless, it is widely acknowledged that enhancing the intellectual property system in Mozambique could yield numerous benefits. By doing so, a more conducive business environment can be created, allowing for economic diversification and the growth of emerging industries. Moreover, an improved intellectual property system has the potential to attract various forms of FDI, leading to the generation of employment opportunities and contributing to the development of human capital within the country. In conclusion, this study provides insights into the complex relationship between IPR and FDI, emphasizing that the relationship between IPR and FDI is complex and influenced by various factors, including industry characteristics, technological advancements, legal frameworks, and institutional quality, hence the need for careful analysis and consideration of specific country contexts. The findings underscore the potential benefits of strengthening intellectual property protection as a means to stimulate FDI and facilitate technology transfer in Mozambique.