Comment II: TRIPS and Technology Transfer – Evidence from Patent Data

Summary

Introduction

Will developing countries win or lose from a regime of stronger intellectual property protection? Answering this question will ultimately require a quantitative analysis. The three chapters in this section, while not quantitative, do a good job of laying out the potential effects on developing countries, both positive and negative, of this new regime.

Carlos Correa argues that stronger intellectual property rights (IPRs) in developing countries will diminish the transfer of existing technology to them. One means of such transfer of knowledge is through active imitative activity in developing countries, exactly the type of activity that stronger IPRs are designed to halt. As a student of Robert Evenson, I learned that a critical step on the road to development is to become a good imitator.

While Carlos Correa is concerned about getting existing technology to developing countries, Arti Rai worries about the potential negative effects of stronger IPRs on the creation of new technology for developing countries. Her point is that in a regime of strong IPRs (even if only in developed countries), upstream patents may raise the transactions cost of doing research for developing-country problems. Rai illustrates these problems nicely with examples and case studies.

Keith Maskus, Kamal Saggi, and Thitima Puttitanun point out that developing countries could actually gain by providing stronger IPRs. The mechanism is that tighter protection makes it more likely that technology owners will be willing to transfer technology knowing that they will be able to appropriate some of the benefits. These authors go on to model the choice between licensing and foreign direct investment (FDI), examining how this choice is influenced by the strength of IPRs.