The Economic Development Dimensions of IP

In "Intellectual Property Research and Development Lessons from Recent Economic Research," editors Carsten Fink and Keith E. Maskus conclude that developing countries should carefully assess whether the economic benefits of additional rules for the protection of IPRs outweigh their costs. In their view, these costs encompass both the net fiscal expenditure of financing relevant government agencies and the opportunity cost of employing possibly scarce human capital in the administration of the intellectual property system.

The economic research presented in their book also suggests that there is an important development dimension to the protection of IPRs:

At the same time, in view of the various tradeoffs associated with alternative IPR standards, a "one size fits all" approach is unlikely to work. Developing countries may want to opt for different standards of protection than the ones that prevail in high income countries that have different technological and financial capabilities. Although the current international framework for the protection of intellectual property provides for some degree of harmonization of global IPR standards, TRIPS, in particular, still leaves important room to adjust IPR norms to domestic needs.

“Countries that sharply strengthen their IPR regime are unlikely to experience sudden boosts in inward Foreign Direct Investment,� says Maskus. “They would be better advised to improve overall investment climate and business infrastructure.�

On the other hand, several studies in the book point to a significant development dimension to the protection of intellectual property. Interviews with firm managers in China show the negative effect of weak trademark protection on innovative Chinese enterprises. “Interestingly, there are strong regional disparities in the enforcements of IPRs�, says Maskus, “with the effect that firms are reluctant to expand into China’s poorer regions, where enforcement is comparatively weak.�