This paper examines the debate between the North and the South regarding the enforcement of intellectual property rights (IPRs) within a dynamic general equilibrium framework. The North innovates new products, while the South imitates them. The paper evaluates the welfare effects of tighter IPRs by decomposing a region's welfare change into four components: terms of trade, production composition, available product choice, and intertemporal allocation of consumption spending. It provides a theoretical evaluation of each component and their relative size. The analysis begins with an exogenous rate of innovation to focus on the first two components. The last two components are added by endogenizing the rate of innovation. The paper also considers the role of foreign direct investment (FDI). It is shown that tighter IPRs can hurt both the North and the South, depending on the rate of imitation. When imitation is slow, tighter IPRs hurt both regions. When imitation is high, tighter IPRs hurt the South but benefit the North. This suggests a conflict of interest about the desired policy change only when imitation is high. The paper develops dynamic general equilibrium models of two regions, North and South, where innovation occurs in the North and imitation occurs in the South. The models are based on the theory of endogenous growth and international trade developed by Grossman and Helpman (1991b). The paper identifies four channels through which IPRs affect these regions: (a) terms of trade; (b) interregional allocation of manufacturing; (c) product availability; and (d) R&D investment patterns. It provides welfare evaluations of each effect and compares their relative size. The paper shows that tighter IPRs can initially raise the rate of innovation but ultimately lead to a decline. The overall effect on welfare depends on the rate of imitation. When imitation is slow, tighter IPRs hurt both regions. When imitation is high, tighter IPRs hurt the South but benefit the North. The paper concludes that both regions lose from tighter IPRs when imitation proceeds at a slow pace.This paper examines the debate between the North and the South regarding the enforcement of intellectual property rights (IPRs) within a dynamic general equilibrium framework. The North innovates new products, while the South imitates them. The paper evaluates the welfare effects of tighter IPRs by decomposing a region's welfare change into four components: terms of trade, production composition, available product choice, and intertemporal allocation of consumption spending. It provides a theoretical evaluation of each component and their relative size. The analysis begins with an exogenous rate of innovation to focus on the first two components. The last two components are added by endogenizing the rate of innovation. The paper also considers the role of foreign direct investment (FDI). It is shown that tighter IPRs can hurt both the North and the South, depending on the rate of imitation. When imitation is slow, tighter IPRs hurt both regions. When imitation is high, tighter IPRs hurt the South but benefit the North. This suggests a conflict of interest about the desired policy change only when imitation is high. The paper develops dynamic general equilibrium models of two regions, North and South, where innovation occurs in the North and imitation occurs in the South. The models are based on the theory of endogenous growth and international trade developed by Grossman and Helpman (1991b). The paper identifies four channels through which IPRs affect these regions: (a) terms of trade; (b) interregional allocation of manufacturing; (c) product availability; and (d) R&D investment patterns. It provides welfare evaluations of each effect and compares their relative size. The paper shows that tighter IPRs can initially raise the rate of innovation but ultimately lead to a decline. The overall effect on welfare depends on the rate of imitation. When imitation is slow, tighter IPRs hurt both regions. When imitation is high, tighter IPRs hurt the South but benefit the North. The paper concludes that both regions lose from tighter IPRs when imitation proceeds at a slow pace.