6Higher concentration in few patent offices If we look at the shares of patent applications filed between 1995 and 2010, we can note the following interesting points:1. The share of patents filed in China in 1995 is 1.8% of the world total, in 2010, it is 19.8%
7Few countries originate most patent filings Main origins of PCT applications (2013) (source WIPO statistics database)
8More on origin concentration Patent applications through the Patent Cooperation Treaty is overwhelmingly come from USA, Japan, Germany, China and the Republic of Korea
9Increasing IP use translates into… Productivity?Technology transferInnovation?Economic growth?Development?Start-ups?Creative outputs?We have evidence of some, but not allCompetition?Trade?Licensing?Investments?
10IP, Growth & Development: Theory Basic economic incentive for IP protection should work everywhere … but initial conditions across countries varyStudy 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 costArguably: is imitation bad?
11Note: issue of causality: unsure if countries have high income because they are innovative or that innovative countries tend to be in the high income bracket; story is likely to be a combination of the two.
12Strength of IPR and income levels for 177 countries, 2005 Source: Park index and World Bank
13What 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 frameworkInnovation ecosystem3. Can we isolate the impact of IP on growth rate?National endowment of resourcesQuality of infrastructureMacroeconomic stabilityBusiness and investment climateInvestments in education and healthOpenness to trade and foreign investment
14Going 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 incentivesIs it neutral?Who wins and who loses?Who pays the bill?
15Market failure #1Information (and knowledge) good have traits of public good:Non-rivalryNon-excludability, to a certain extentProducing knowledge is costlyIncreasing returns to productionDifficult to appropriate returnsUncertainty
16Market failure #2Markets may fail if there is asymmetric information between buyers and sellers of goodsE.g.: markets for used cars or insuranceSuperior quality may give incentives to invest in reputation…if it reassures consumers that they purchase what they intend to purchase
17IP instruments Stimulate innovative and creative activities Patents, utility models, copyrights, industrial design, plant breeders’ rightsAlternatives: trade secrets, R&D subsidies, tax exemptions or prizesAddress asymmetry of information issueTrademark, geographical indication, collective marksAlternatives: consumer protection, sanitary controls, product customization
18IP Trade-off Advantages Disadvantages Market selection i.e. consumers pay not tax-payersMinimizes welfare distortion i.e. only market successDisadvantagesMonopoly creationBias against basic research i.e. only market oriented
19Summarizing Use of IP protection is on the rise Increasing use of IP protectionBroader geographical use of IP protectionLink between IP protection and economic developmentImpact varies according to countries’ innovative and absorptive capacitiesIncreasing use of IP affects certain aspects of economic activitiesBut these are not neutral