The impact of intellectual property rights protection on technological progress

Abstract

Intellectual Property Rights (IPR) protection has been a continuing concern by most member countries of WTO. The central issue is whether to adopt a strong or weak IPR protection. Developed countries tend to use various types of pressure to induce developing countries to enforce IP law strictly. On the other hand, the TradeRelated Aspects of Intellectual Property Rights (TRIPS) appears to require a minimum standard for IPR protection by its desire for IPR to contribute to the promotion of technological innovation. However, most developing and least developed countries are reluctant to follow the requirement of TRIPS because of their perception that IPR protection has scarcely brought them benefits or that they suffer from it. These concerns serve as the rationale for the general purpose of this study, which is to investigate the impact of IPR protection on technological progress and the role of TRIPS in the economic development and social welfare of developing countries. The objectives of this study are: first, to investigate the impact of IPR protection on technological progress in WTO member countries; second, to investigate the role of TRIPS for the member states as claimed in the objectives of TRIPS; and to investigate the impact of IPR protection on social welfare. The study uses panel data from 224 countries during 2006-2008 with fixed effect and random effect models. The level of technological progress is measured by the number of patent applications. This study uses the IPR index representing the degree of IPR protection in each country which is categorized by the specific characteristics of the countries. Secondary data for the research was obtained from relevant international agencies and organizations. Technological progress regression is tested for two steps. The first is for all countries of the observations, the second for the countries of innovator and user of technology. The social welfare regression is tested for the impact on the health care of infants that focuses on the system of strong and weak IPR protection. The empirical results show that R&D expenditure plays the key role in technological progress, IPR protection does not impact on technological progress, and strong IPR protection increases infant mortality rate. The results suggest that flexibility in the implementation of the TRIPS agreement would be appropriate for developing countries. Weak IPR protection would be the option for developing and least developed countries aiming at health welfare improvement. A strong IPR protection may have an adverse impact on social welfare.