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Developing Nations and Intellectual Property

By 29 July 2010 No Comment

The Rand Corporation has released Intellectual Property and Developing Countries: A review of the literature (2010), a report to “support[] the UK Intellectual Property Office (IPO) and the Department for International Development (DfID) in assessing the impact of intellectual property rights (IPRs) in developing countries, in the context of the World Trade Organization’s Agreement on Trade-Related Intellectual Property Rights (TRIPS) and the development of TRIPS-plus standards.”

The report is deliberately low-key (a.k.a. – wonkish) and even-handed in the “supporters say – opponents say” mode, but since the topic of IP and development is subject to considerable heat, it is good to have reputable researchers take the bland approach.

No one will be surprised that the conclusions are in this spirit of on-the-one-hand-and-on-the-other-and-we-wish-we-had-a-couple-of-more-hands.

This report presents the results of studies examining the effects of strengthening IPRs in developing countries. It reviews the results of the recent grey and scholarly literature on the positive and negative effects of stronger IPRs in developing countries, with a focus on five areas: FDI, trade, innovation, public health, genetic resources and traditional knowledge. The report also suggests future research directions.   . . . .

The empirical literature on the effects of strengthening IPRs in developing countries has grown substantially over the past decades. However, it remains surprisingly scarce, despite the passionate debate generated by the implementation of TRIPS and the subsequent development of bilateral and regional free agreements creating higher standards for IPRs in developing countries. Consequently, the main findings presented in this report should be interpreted with caution.

Under each of the discrete topics, the conclusion is that more research is needed (amazing!).  There is also some question about some of the research that has been included, such as the claim “that less than 10 per cent of global health research is directed towards diseases that afflict 90 per cent of the world’s population – the so called ‘10/90 gap’,” which has been de-bunked, according to some reliable analysts. (I will look for a link.)

I have a deeper reservation, in that it is important not to place too much weight on the power of empirical studies to supply answers. Such studies are inherently difficult to conduct on policy matters because of the proliferation of variables and the fact that the components under study are people, who have individual wills with which to respond to each other. Scientific work would be rather more difficult if the molecules had self-awareness and an ability to respond to whatever structure was established by the experimenter.

To some degree, in studying institutions such as property rights, one is better off to approach it first as a logical problem in assessing the nature of the incentives created, and then to use the empirical work as a check on whether one has properly understood the structure.

In this spirit, I have a hard time visualizing how a system would encourage innovation without institutions of intellectual property protection.  Innovation takes investment of time, energy, and money — and often leads nowhere — so unless there is some way to capitalize on it, it will happen only at a minimal level. So the alternatives to IP are either government subsidies, otherwise known as pork to the connected rather than the creative, or some kind of monopoly power that enables corporate sponsors of research to be sure of a return.

I could be persuaded to change my view by an empirical study that showed a highly creative and innovative society that had no IP protection, but I have not seen one yet. And there have been lots of natural experiments in that the great innovation-based technical and industrial revolutions occurred in societies which had developed IP protection, and not elsewhere.

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