1. Theme 7 Intellectual Property and Economic Development
WIPO UNITO-LLM ITC-ILO
Julio Raffo
Economics & Statistics Division (WIPO-ESD)
Geneva
October 23, 2014

2. Outline Highlights of global IP trend IP and economic development
Economics of IP
Q&A session

3. More and more patent applications every year
Trend in Patent applications, (source WIPO statistics database)
Total patent applications filed worldwide is increasing

4. Not only patents: Trademarks x4 in 25 years!
Trend in Trademark applications, (source WIPO statistics database)

5. …and Industrial Designs x7!
Trend in Industrial Design applications, (source WIPO statistics database)

6. Higher concentration in few patent offices
If we look at the shares of patent applications filed between 1995 and 2010, we can note the following interesting points:
1. The share of patents filed in China in 1995 is 1.8% of the world total, in 2010, it is 19.8%

7. Few countries originate most patent filings
Main origins of PCT applications (2013) (source WIPO statistics database)

8. More on origin concentration
Patent applications through the Patent Cooperation Treaty is overwhelmingly come from USA, Japan, Germany, China and the Republic of Korea

9. Increasing IP use translates into…
Productivity?
Technology transfer
Innovation?
Economic growth?
Development?
Start-ups?
Creative outputs?
We have evidence of some, but not all
Competition?
Trade?
Licensing?
Investments?

10. 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
Arguably: is imitation bad?

11. Note: issue of causality: unsure if countries have high income because they are innovative or that innovative countries tend to be in the high income bracket; story is likely to be a combination of the two.

12. Strength of IPR and income levels for 177 countries, 2005
Source: Park index and World Bank

13. 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

14. 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?

15. 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

16. 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

17. 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 Disadvantages
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

19. 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

20. Thank you for listening
Questions?