Theme 7
Intellectual Property and Economic
Development
WIPO
UNITO-LLM
ITC-ILO
Julio Raffo
Economics & Statistics Division (WIPO-ESD)
Geneva
October 23, 2014
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…
Productivity?
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
Strength of IP regime
5
4
3
2
1
5
7
9
log of GDP per capita (PPP)
Source: Park index and World Bank
11
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
18
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
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
Thank you for listening
Questions?
Julio.raffo@wipo.int