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Introduction

This section addresses the debate over movement toward a uniform, worldwide system of intellectual property rights (IPRs). The ability to protect intellectual property in countries around the world, while long recognized by the scientific, engineering, and business communities as important, did not occupy center stage as a policy issue until recently. Because of their highly technical and complex subject matter, IPR issues had been relegated to specialized administrative agencies. In the past decade, however, IPRs have become a much higher-priority issue on national and international policy agendas, particularly in regard to trade policy.

Major factors in the increasing prominence of IPR issues have been the globalization of markets and the increase in international trade in high-technology products. This environment has increased the significance of technological capabilities and the products of technology to companies and nations around the world. As multinational corporations increasingly conduct their manufacturing and marketing activities across borders, international protection of intellectual property is becoming more and more important to them.

Increased reliance on strategic alliances and joint ventures has also increased the importance of intellectual property protection, which enables firms to share their technology with partners without losing control of it. Increased competition from many nations puts a premium on the ability of firms to generate and exploit technological innovations. Considerations of international cooperation and competition also make IPR issues of greater



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Global Dimensions of Intellectual Property Rights in Science and Technology Introduction This section addresses the debate over movement toward a uniform, worldwide system of intellectual property rights (IPRs). The ability to protect intellectual property in countries around the world, while long recognized by the scientific, engineering, and business communities as important, did not occupy center stage as a policy issue until recently. Because of their highly technical and complex subject matter, IPR issues had been relegated to specialized administrative agencies. In the past decade, however, IPRs have become a much higher-priority issue on national and international policy agendas, particularly in regard to trade policy. Major factors in the increasing prominence of IPR issues have been the globalization of markets and the increase in international trade in high-technology products. This environment has increased the significance of technological capabilities and the products of technology to companies and nations around the world. As multinational corporations increasingly conduct their manufacturing and marketing activities across borders, international protection of intellectual property is becoming more and more important to them. Increased reliance on strategic alliances and joint ventures has also increased the importance of intellectual property protection, which enables firms to share their technology with partners without losing control of it. Increased competition from many nations puts a premium on the ability of firms to generate and exploit technological innovations. Considerations of international cooperation and competition also make IPR issues of greater

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Global Dimensions of Intellectual Property Rights in Science and Technology concern to national governments, many of which have moved to better integrate this policy area into broader economic and trade policies. A related reason for the greater visibility of IPR issues is the increased losses suffered by businesses in industrialized countries as a result of weak IPR systems, especially in developing countries. As long as the developing countries had little technological capability, firms in industrialized countries tolerated weak IPR regimes in those nations because losses due to unauthorized use of intellectual property were low. As the technological capability of developing countries grew to the point that some could quickly copy advanced technology and manufacture high-technology products efficiently, the losses to firms in industrialized countries began to grow and the governments of those countries began to pressure the developing countries to enact and enforce stronger IPR systems. Led by the United States, the industrialized countries are now pressing for a uniform, worldwide system of IPRs. They have argued that strong intellectual property rights protection in all countries is necessary for firms to reap the economic returns from their investments in innovation, and thereby continue to invest in R&D and innovation, which will lead to future economic growth. A move toward stronger, possibly uniform, IPR systems, however, is being resisted by many countries, particularly developing countries and newly industrialized countries, for a variety of reasons. The governments of those countries have argued, among other things, that strong IPRs would deter progress toward their national economic development objectives by increasing the cost of obtaining new foreign technology. Negotiations on these issues are being conducted as part of the current Uruguay Round of the General Agreement on Tariffs and Trade. An effort is being made at those talks to achieve a stronger set of international standards for intellectual property protection. In addition, talks being conducted at the World Intellectual Property Organization are aimed at achieving greater harmonization among national patent laws. The first two chapters in this section argue, respectively, for and against a uniform, worldwide intellectual property system. In Chapter 3, Robert Sherwood addresses the question of whether, on balance, strong intellectual property protection can be expected to benefit or harm developing countries. The international IPR system he posits and analyzes would have similar practical effects in different countries, although national laws would not necessarily be standardized or even harmonized. Sherwood concludes that the benefits of such a system to developing countries would outweigh the harm to those countries. In Chapter 4, Claudio Frischtak makes the counterargument in favor of national IPR regimes that are differentiated according to level of technological and productive competence. He notes that national IPR policies are

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Global Dimensions of Intellectual Property Rights in Science and Technology generally established to promote a nation's perceived self-interest and that, for a variety of reasons, the interests of different nations are best served by differing levels of intellectual property protection. Chapter 4 examines the question of economic effects of differentiated IPR regimes from the perspective of domestic welfare, under conditions of closed and open economies, and from the global welfare perspective. The final chapter in this section, Chapter 5, addresses the economic effects of unauthorized use of intellectual property. Edwin Mansfield presents data on the effects of weak intellectual property protection on developing countries in terms of its influence on foreign direct investment and technology transfer. He also summarizes what is known about the economic effects of weak protection on innovating firms in terms of lost revenue and investment opportunities and the relationship between IPR protection and the rate of technological innovation. Professor Mansfield articulates the central premise of one side of the IPR debate: If intellectual property rights were weakened considerably, it could have unfortunate consequences. The incentives for industrial innovation, already relatively weak in industries where patents are ineffective and entry is easy, might wither to the point where the investment in new and improved products and processes would be far below the socially optimal level. Given the central importance of industrial innovation for economic growth, such an eventuality would do considerable harm, both to the United States and to other countries. The possibility of negative effects on innovation and economic growth must be taken very seriously. This line of thought, however, should be contrasted with the view taken by Paul David in Chapter 2—that under some conditions IPRs can have seriously detrimental consequences for the processes of discovery and invention. Unfortunately, there is little empirical evidence on the effects of IPRs on invention and innovation under varying conditions that might help resolve the difference between these two views. This adds to the difficulty of reaching international agreement on the strength and scope of intellectual property protection.