• Intellectual property rights

Intellectual property rights

This policy brief examines key dimensions of the institutional changes with respect to intellectual property rights (IPRs) in developing countries (DCs). Currently, conformity with the minimum global IPRs standards has become a prerequisite for DCs wishing to access global technologies. The IPRs wave, which is correlated with the strength of other institutional variables, started due to the Uruguay Round conclusion and the economic progress in the former socialist countries. The Trade-Related Aspects of Intellectual Property Rights (TRIPS) continues to play a central role in this process, as well as the World Intellectual Property Organisation (WIPO). The DCs belonging to such international organisations is being reflected in changes in the institutions governing IPRs in these countries.

Some previous studies point to a positive association of strengthened IPRs with certain other economic variables such as foreign direct investment (FDI), technology transfer and domestic innovation. This paper states that international trade integration and institutional quality are to be considered central factors accounting for differences in average income levels among nations. The paper highlights the following facts:

• the quality of institutions has a positive and significant effect on international trade integration

• trade in turn can have a positive influence on institutional quality

• good institutions are almost always associated with increased amounts of FDI inflows

• factors such as market scale or strategic positioning prove to be dominant factors motivating investment and trade

Protecting IPRs is essential; otherwise, there will be insufficient incentives to innovate. However, the protection and enforcement of IPRs should contribute to the dissemination of technology. The paper gives Singapore as an example of economies that have overcome scale limitations in their domestic stocks of IPRs through their integration into the global economy.

The paper exposes some accusations to the system of international IPRs rules:

• the system is imposing an undue burden on developing countries

• it increases the cost of intellectual content for developing countries

• DCs do not have the capacity to capitalise on their own potential

• the promises of technology transfer and FDI do not appear to be yielding adequate results for DCs

Nevertheless, the paper notes that some DC governments have sought to exploit strengthened IPRs strategically as a development tool intended to encourage investment and domestic innovation.

The paper concludes that although an effective IPR regime may not be sufficient to attract FDI, an inadequate IPRs regime can be a deal-breaker for an economy looking to invest or trade.

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