IPR and Global Economic Disparity

Introduction

Intellectual property rights have become a bone of contention in the relations between the developing and developed world. With the technological advancement of the developed world, far outpacing the developing world, there is a gap in the intellectual property that has accumulated in the developed world, especially in the area of patents, which are significantly higher in the developed world. While the developing countries have tried to close the gap in technological prowess between themselves and the developed world by imitation and copying, the developed world has depended on the use of Intellectual Property Rights (IPR) law to restrain such imitation on the part of firms.

The research problem that this dissertation seeks to explore comes from the conflict between the developed and developing countries on the issue of IPR law and its strict application in the developing countries’ jurisdictions. In the past few years, many developing countries have found themselves under the pressure to introduce laws that strengthen the IPR protection in their jurisdictions. There is also a pressure for these countries to implement the TRIPS agreement. Those who argue in favour of strengthening the IPR laws in developing countries suggest that stronger IPR laws would be beneficial to both developing countries as well as developed countries as these laws will create a framework and a regime within which firms of both sides will be protected in their innovations. On the other hand, those who criticise this approach argue that stronger IPR laws in developing countries would be detrimental to the interests of the developing countries. IPR laws increase imitation costs, and reduce

access to global information which is why firms in developing countries are placed at a competitive disadvantage in global markets as compared to the firms from developed countries which enjoy rights attached to their patents and IPR laws in their jurisdiction. Another angle in support of IPR laws is that even though these may come with a higher cost of implementation, there are decided benefits attached because of increased investment from MNCs that are more confident in investing in countries that have stricter IPR law protection. There are also potential benefits from technology transfer from developed countries, and increased Foreign Direct Investment in technology products. These can help developing countries to offset the high costs attached to the implementation of the IPR law and TRIPS agreement.

From the perspective of the developing countries, there is a self-perception of structural weakness and inequality that is also a reason for their rejection of stricter IPR laws. The dependency theory has been posited by some social theorists to explain the phenomenon of developing countries not achieving comparable economic development as the developed countries. Colonialism and its legacy are partly to be blamed for this perception as well as the actual conditions of the world trade system which is heavily inclined towards the developed countries. The world system which is heavily in favour of the developed countries, has seemingly trapped newly liberated countries in the 20th century into a system that shows lack of infrastructure and market support to help them produce and market commodities on favourable terms. In such conditions critics of the stricter IPR regime argue that efforts of developed countries to impose a global IPR regime is a way of aiding the developed world’s ability to control and exploit technical knowledge and expertise, including vast resources lying latent in the developing world.

This dissertation seeks to explore the two sides of the debate on stricter IPR law for developing countries. The dissertation contains two substantive chapters. The first concerns the arguments that are made to show how IPR law is an obstacle for the development of the developing countries. The second substantive chapter reviews the evidence relating to IPR protection in the developing nations and suggests that the broad policy argument in its favour may be more unclear than its strong supporters seem to allow. The conclusion at the end of the dissertation summarises the principal points and relates the findings of the dissertation.

Conclusion

This dissertation reviewed the literature on the debate on IPR law implementation in the context of the developing nations. The principal inquiries in this dissertation were related to the objections to strict IPR law implementation in developing nations as well as the potential benefits of this approach. This part of the dissertation conveys the principal findings of the dissertation. The principal finding of this dissertation, based on the review of relevant literature, is that the a broad policy argument in its favour is more unclear than its strong supporters allow. Coming from this angle, a strong IPR protection in the developing world may not be a sound economic policy.

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One of the important findings of this research is that strong IPR rules for developing countries that are of the same level as developed countries may lead to the slowing down of the industrial development for these countries. This is because the domestic firms of developing countries may not get any opportunities to copy and adapt technologies that are available in the developed world, which is a denial of an important strategy of reverse engineering. Developing countries will find it difficult to work around the patents and the attached rights that are already created in the developed world and will consequently not be able to achieve the development of technologies at similar stages of growth that the developed countries achieved.

Another noteworthy point is that stronger IPR laws lead to the increase of the prices of technologies in developing countries. This happens when the developing countries have applied stricter protection of rights of foreigners or foreign firms leading to difficult conditions of competition by domestic firms that do not have the same level of technological development and thus deny the markets cheaper domestic alternatives to these foreign technologies. Consequently, the impact is to make the technology more expensive for the local consumers of developing countries. Therefore, from the perspective of affordable accessibility of technologies, the consumers of the developing countries are faced with the prospect of paying higher costs for the same products and goods because there are no cheaper domestic alternatives.

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On the brighter side, there are positive links between IPR protection and innovation in developing countries. As IPR becomes stricter in developing countries, domestic firms are prevented from copying or imitating technologies of the developed world. This pushes the domestic firms to innovate more and push for their own patents for innovative technologies. For such conditions to be created, there must be an optimal level of IPR protection in the developing countries, that can balance the trade-off between facilitation of imitation of developed countries’ advanced technologies and incentivising innovations by domestic firms. This is not possible in countries that have low levels of economic development, because in such countries, development will depend to some extent on imitation of developed countries’ technologies so as to increase the developing country’s technological ability. Once technological ability of a country has reached a specific level or threshold, then the developing country may find it more beneficial to encourage domestic innovations, rather than imitation, which is why eventually, the developing countries will come to provide a higher protection of IPR law so as to also protect domestic innovation. In other words,

The argument that IPR law is beneficial to developing countries in terms of their domestic innovation, is not generalisable to all developing countries as it essentially depends on the level of economic and technological development in the developing countries. Therefore, this argument only serves to strengthen the role of imitation in developing countries. Therefore, this is a paradox that for developing countries to achieve some level of economic and technological advancement, it would first have to allow and facilitate imitation through lower levels of IPR protection.

Another benefit of a stronger IPR framework is that there is more potential of technology transfer to developing countries from developed countries. Firms from developed countries may choose not to transfer technology to the developing countries that have lax IPR protection because they will not get much protection against imitation in the developing countries. However, as this research has found, the link between technology transfer and IPR law is not unambiguous. Example can be taken of Korea, which benefitted from technology transfer through licensing arrangements and sub- contracting agreements despite the lack of a strong IPR law. Therefore, the potential link of technology transfer with a stronger IPR law is not strong or unambiguous enough to offset the arguments against the application of stronger IPR law in the developing world.

Finally, it may be noted that one of the strong arguments against the strict application of the TRIPS Agreement in the developing countries is that without yielding corresponding benefits for developing countries, the TRIPS agreement is leading to higher costs for developing countries that want to upgrade their technological capabilities. The burden imposed by the TRIPS agreement comes due to the administering and enforcing IPR reforms in order to implement TRIPS, which has raised ethical concerns for the developing countries for using scarce resources available to developing countries so as to benefit a handful of private multinational companies.

To conclude, this dissertation did not find any strong arguments for the application of stricter IPR laws in the developing countries. On the contrary, there is evidence that shows that such approach is against the interests of the developing countries. Therefore, the evidence on this issue is not strong or unambiguous enough to argue in favour of a strong IPR protection law in the developing countries.

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