The Effect of GDP Growth on Pharmaceutical Patent Protection, 1945-2005

We investigate whether there is a U-shaped relationship between GDP per capita and country patent protection for pharmaceuticals. Using the Pharmaceutical Intellectual Property Protection (PIPP) Index, we find no evidence of a U-shaped relationship for any of the 154 countries in our sample or for global aggregates. There is, however, evidence for a U-shaped relationship in some annual cross-section scatter plots and Tobit regressions. Using a random-effects Tobit estimator and cubic as well as quadratic GDP per capita variables, we find evidence both for and against a monotonically increasing relationship between GDP and the predicted PIPP Index.