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Intellectual Property and Developing Countries

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Intellectual Property and Developing Countries

Intellectual Property and Developing Countries
The World Intellectual Property Organization (WIPO) describes Intellectual property (IP) as creations of the mind: inventions, literary and artistic works, and symbols, names, images, and designs used in commerce. Because Intellectual property is not physical, it poses some difficulty when trying to establish and enforce laws to protect it. The most common ways of protecting Intellectual property are done through patents, trademark and copyrights. Patents and trademark laws protect inventions, trademarks industrial designs, and geographic indications of source (i.e. symbols that specifically distinguish the source of goods); and copyright laws cover literary works, choreography, novels, paintings and architectural designs. Although it is a somewhat controversial issue, I have found that it is very necessary for developing countries to have customized intellectual property laws. These laws will aid in efficiently accessing and sharing of research and technological information, increased innovation, and present a more enticing environment for Foreign Domestic Investments (FDI).
Although greatly debated, in the biotechnology and the pharmaceutical industry, strong intellectual property rights are very important and can literally save lives. In China alone stronger IPR laws that prevent counterfeiting could save as many an astronomical number of lives each year. The World Health Organization (WHO defines counterfeit medicines as products deliberately and fraudulently produced and/or mislabeled with respect to identity and/or source to make it appear to be a genuine product. Because many counterfeit drugs are manufactured and infused with pesticides, brick and many other unknown substances they kill an estimated 200 to 300,000 people per year. These are only the reported cases, so the actual number of deaths could be much higher. The National Association of Boards of Pharmacy reports that counterfeit drugs generated an estimated $75 billion in revenue in 2010. The World Health Organization reports that developing countries of the Western Pacific (China, Philippines and Vietnam) comprised the region with the most reported cases of counterfeit pharmaceuticals with nearly 49 percent.
Those that disapprove of strong IPR laws feel that innovation is halted when these laws are implemented; but the Biotechnology Industry Organization begs to differ. In recent and past studies it has been suggested that if intellectual property is protected using the patent system IPR actually stimulates biotech research and heightens innovation. Strong IP laws aids in knowledge transfer from more industrialized countries because of the increase in foreign direct investment (FDI). When IP laws are properly implemented and enforced multinational companies are encouraged deploy better technology in that country in which they have invested to support their products and services.
The following studies support stronger IPR laws and their affects on technology transfer, foreign direct investment (FDI), and innovation: 1. Primo Braga and Fink (1998) examined the available empirical evidence on the relationship between IPRs and FDI. Based on surveys of FDI and from econometric evaluations; the study found that surveys of foreign investors in industrial countries confirm a positive link to the strength of existing IPRs and there is growing evidence that IPRs affect FDI decisions in countries all over the world. 2. Léger (2006) studies the relationship between the strengthening of IPRs in developing countries and the level of innovation in these countries. Regression analysis is used to determine the relationship between specific economic and political determinants and these factors affect innovation in selected developing and industrialized countries. The factors considered are: 1) demand-pull factors (public demand for new products and services); 2) technology-push factors (advancements in technology which create new products and services); 3) macro-economic stability; 4) political instability; 5) access to capital; 6) cost of capital; 7) competition; 8) IP protection; and 9) human capital and education. The study concluded that the top two factors that were most influential on innovation, in developing and industrialized countries, were (2) technology-push and (8) IP protection. 3. Meir Pugatch et al (2007) examined technology transfer activities in the developing world. Their discussion paper suggests that there is evidence that IPRs are important for the promotion of innovative, inventive and technology transfer activities in developing countries which include the pharmaceutical and biotechnology industry. The paper examined commercialization initiatives stemming from public-private groups in China, India, South East Asia, Africa and South America. The study concludes that those working in research believe that IPRs are an important in their ability to successfully market their innovations and bring new products to market.

Gewertz, N. & Rivka, A.(2004) Intellectual Property and the Pharmaceutical Industry: A Moral Crossroads Between Health and Property. Journal of Business Ethics. Vol. 55:3. pp 295-308
Lee, J.Y. & Mansfield, E. (1996), “Intellectual Property Protection and US Foreign Direct investment”, Review of Economics and Statistics, Vol. 78, Vol. 2, pp. 181-86
Primo Braga, C. & Fink, C. (1998), “The Relationship Between Intellectual Property Rights and
Foreign Direct Investment”, Duke Journal of Comparative and International Law, Vol. 9, pp.163-187 Barrone, E. (2005), “Intellectual Property Rights and Innovation in SMEs in OECD Countries”,
Journal of Intellectual Property Rights, Vol. 10, January 2005, 34-43
Center for Medicine in the Public Interest. Counterfeit drugs and China. Retrieved from World Health Organization (WHO). General information on counterfeit medicine. Retrieved from
World Intellectual Property Organization. Global Challenges and Intellectual Property:
Unlocking the potential of innovation and IP for an equitable world. Retrieved from

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