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INTELLECTUAL PROPERTY RIGHTS AND ECONOMIC DEVELOPMENT Keith E. Maskus Professor of Economics University of Colorado, Boulder Revised Draft: February 6, 2000 Prepared for the series “Beyond the Treaties: A Symposium on Compliance with International Intellectual Property Law”, organized by Fredrick K. Cox International Law Center at Case Western Reserve University. ABSTRACT: This paper provides an analytical overview of how economic development may be promoted or hindered by an effective system of intellectual property rights (IPRS). IPRS can play a positive role in encouraging new business development, rationalization of inefficient industry, and inducing technology acquisition and creation. They may harm development prospects by raising the costs of imitation and permitting monopolistic behavior by owners of IPRS. The potential gains and losses depend on the competitive structure of markets and the efficiency of related business regulation, including aspects of competition policy and technology development policy. The paper reviews available empirical evidence on these issues. The evidence supports the view that product innovation is sensitive to IPRS in developing countries, while FDI and technology transfer go up when patent rights are strengthened. Overall, there is a positive impact on growth, but this impact depends on the competitive nature of the economy. The paper concludes by putting forward suggestions for integrated policy reforms.
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1. Introduction The question of how intellectual property rights (IPRS) affect the processes of economic development and growth is complex and based on multiple variables. The effectiveness of IPRS in this regard depends considerably on particular circumstances in each country. While economists are devoting more attention to this issue, evidence to date is fragmented and somewhat contradictory, in part because many of the concepts involved are not readily measured. As I discuss below, stronger systems for protecting intellectual property could either enhance or limit economic growth, in theory. Nevertheless, evidence is emerging that stronger and more certain IPRS could well increase economic growth and foster beneficial technical change, thereby improving development prospects, if they are structured in a manner that promotes effective and dynamic competition. 1 As the global protection regime strengthens due to implementation of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), concluded under auspices of the World Trade Organization, numerous questions arise about impacts on prospects for economic growth. For many reasons, it is impossible to claim confidently that the new regime will raise growth and improve economic development processes. Two such reasons are paramount. First, many other variables affect growth in ways that could dominate the impacts of IPRS. Such elements include macroeconomic stability, market openness, policies for improving the economy’s technological
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This note was uploaded on 04/16/2010 for the course ECO 3411 taught by Professor Tabrizi during the Spring '10 term at St.Francis College.

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