| Abstract | This paper introduces the technology transfer loss, the technology isomorphism in final product production, and the monotonicity property of technology isomorphism with respect to the optimal patent protection into a classical Romer model, and discusses the South’s optimal patent policy and its impact on both North and South’s economic growth. We show that the technology transfer loss, the technology isomorphism, and the monotonicity of technology isomorphism choice with respect to the optimal patent protection interact together and shape the relationship between the optimal patent protection and equilibrium growth rate, and determine the South’s optimal patent protection, which is lower than that in the North. When the transfer loss is at the technology level, both the North and the South share the same growth rate while GDP per capita in the South is smaller, which is consistent with the relative convergence theory. When there exists the growth rate loss in the technology transfer, the South has a lower growth rate and has a quite lower GDP per capita, which is consistent with the polarization theory. Our conclusion implies that the traditional wisdom which claims that the South has no incentive to protect patent might be wrong, and associated trade and intellectual protection policies may damage both the South and the North’s welfare. |