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
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-rivalry Non-excludability, to a certain extent Producing knowledge is costly Increasing returns to production Difficult to appropriate returns Uncertainty
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 activities Patents, utility models, copyrights, industrial design, plant breeders’ rights Alternatives: trade secrets, R&D subsidies, tax exemptions or prizes Address asymmetry of information issue Trademark, geographical indication, collective marks Alternatives: consumer protection, sanitary controls, product customization
IP Trade-off Advantages Market selection i.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 18
Summarizing Use of IP protection is on the rise Increasing use of IP protection Broader geographical use of IP protection Link between IP protection and economic development Impact varies according to countries’ innovative and absorptive capacities Increasing use of IP affects certain aspects of economic activities But these are not neutral