theme 7 intellectual property and economic development wipo unito-llm itc-ilo geneva october 23,...
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Theme 7Intellectual Property and Economic DevelopmentWIPOUNITO-LLMITC-ILO
GenevaOctober 23, 2014
Julio RaffoEconomics & Statistics Division (WIPO-ESD)
Outline
Highlights of global IP trend
IP and economic development
Economics of IP
Q&A session
More and more patent applications every year
Trend in Patent applications, 1985-2012 (source WIPO statistics database)
Not only patents: Trademarks x4 in 25 years!
Trend in Trademark applications, 1985-2012 (source WIPO statistics database)
…and Industrial Designs x7!
Trend in Industrial Design applications, 1980-2012(source WIPO statistics database)
Higher concentration in few patent offices
Few countries originate most patent filings
Main origins of PCT applications (2013) (source WIPO statistics database)
More on origin concentration
Increasing IP use translates into…
Economic growth?Innovation?
Creative outputs?Start-ups?
Investments?
Competition?
Trade?
Productivity?
Technology transfer
Licensing?
Development?
IP, Growth & Development: Theory
Basic economic incentive for IP protection should work everywhere … but initial conditions across countries vary
Study of economic growth process suggests that technological innovation is key for long-term growth…
+ by fostering innovation and technology transfer, IP protection can stimulate economic growth
– reduces imitation, increasing the catching-up cost
1
2
3
4
5
5 7 9 11
log of GDP per capita (PPP)
Str
en
gth
of I
P r
eg
ime
Strength of IPR and income levels for 177 countries, 2005
Source: Park index and World Bank
What are we missing in the picture?
1. What is the causality?IP generates economic growth, or …
later development stages require “more” IP?
2. Can the same policy work in different countries?Legal, economic and political framework
Innovation ecosystem
3. Can we isolate the impact of IP on growth rate?National endowment of resources
Quality of infrastructure
Macroeconomic stability
Business and investment climate
Investments in education and health
Openness to trade and foreign investment
Going back to the economic basics
IP is “simply” an economic policy instrument:What is its objective?
Address problems arising from market failures…
by providing the right incentives
Is it neutral?Who wins and who loses?
Who pays the bill?
Market failure #1
Information (and knowledge) good have traits of public good:
Non-rivalryNon-excludability, to a certain extent
Producing knowledge is costlyIncreasing returns to productionDifficult to appropriate returnsUncertainty
Market failure #2
Markets may fail if there is asymmetric information between buyers and sellers of goods
E.g.: markets for used cars or insurance
Superior quality may give incentives to invest in reputation
…if it reassures consumers that they purchase what they intend to purchase
IP instruments
Stimulate innovative and creative activitiesPatents, utility models, copyrights, industrial design, plant breeders’ rights
Alternatives: trade secrets, R&D subsidies, tax exemptions or prizes
Address asymmetry of information issueTrademark, geographical indication, collective marks
Alternatives: consumer protection, sanitary controls, product customization
IP Trade-off
Advantages
Market selectioni.e. consumers pay not tax-payers
Minimizes welfare distortion i.e. only market success
Disadvantages
Monopoly creation
Bias against basic research i.e. only market oriented
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Summarizing
Use of IP protection is on the riseIncreasing use of IP protection
Broader geographical use of IP protection
Link between IP protection and economic developmentImpact varies according to countries’ innovative and absorptive capacities
Increasing use of IP affects certain aspects of economic activities
But these are not neutral
