| Abstract: |
In the year 2000 some $142 billion in royalties were paid internationally by
users of a specific piece of knowledge that were protected under Intellectual
Property Right law (IPR) to those parties that owned these rights. Under
current circumstances where knowledge & innovation play an increasingly
significant role in the economy (Foray & Lundvall 1996, Cowan, David and Foray
2000, Cooke 2002, Dolfsma & Soete 2006, Dolfsma 2005). IPRs have become
increasingly prominent in debates and are almost unanimously deemed to favor
economic development by policymakers, and certainly by policymakers in
developed countries. While it has been acknowledged that some parties may
benefit more from a system of IPRs than others, in relative terms a Pareto
improvement is the expected outcome (Langford 1997). This has not always been
the case. In addition, the academic (economic) community is almost unanimous
about the system of IPR overshooting its goals. This has been the motivation
to include IPRs in the WTO negotiations. The TRIPS agreement (Trade-Related
Aspects of Intellectual Property Rights) has resulted in 1994 from these
negotiations. Especially during the 1990s the number of patents granted has
grown tremendously despite the fact that many a scholar still supports
Machlup?s (1958, p.28) conclusion that: ?it would be irresponsible, on the
basis of our present knowledge of its consequences, to recommend instituting
one. But since we have had a patent system for a long time, it would be
irresponsible, on the basis of our present knowledge, to recommend abolishing
it.? From other corners, where specific effects of IPRs are considered, a
different and less circumspect sound may be heard. Examples of this are
attempts to make available HIV/AIDS drugs at a reduced price compared to what
the pharmaceutical companies that have the patents on these drugs demand. I
will focus on patents. Empirical and theoretical findings bearing on the
question of IPRs? effect on technological development, and thus prospect for
economic development, are reviewed. Static and dynamic effects are
distinguished. Areas where static effects may be expected include transfer of
knowledge, balance of payment effects, effects for large as opposed to small
firms, and effect on the ?extent of the market?. Areas for dynamic effects
include technological development and technological preemption. The list may
not be exhaustive, and effects are interlocking: they may be mutually
reinforcing or they may conflict. I will mostly focus on ?dynamic? effects. |