A Study of Intellectual Property Rights Protection in Developing Countries

Abstract

Should developing countries conform to industrialized countries' system of strong intellectual property rights (IPR) protection or should they allow their legal system to evolve with the economic structure of the local economy? Developing countries are being asked to harmonize their legal structure with the United States and Europe, a move that may end up stifling innovation and economic development in the developing world.

There appears to exist a critical turning point in a developing economy where local innovators begin to appear. This paper seeks to substantiate that one can identify this turning point through examination of the types of goods demanded in the developing country's market. With the turning point identified, the argument can be made that the rules regarding IPRs on either side of the turning point should be different. For the pre-turning point developing economies, strong protection of IPRs can be a deterrent to economic growth and improvement of the quality of life. The dangers of protecting IPR prior to the developing country reaching the critical turning point are detailed to provide substantiation of this.

How a country industrializes and the involvement of imitators, innovators and IPR protection is explained. The United States provides a good example of a country that has completed the process and illustrates how this turning point is apparent. The results of the empirical investigation show that the critical turning point in a developing economy can possibly be determined through the matrix of types of goods demanded in the local marketplace. This provides the opportunity to examine the rules on either side of the turning point. Finally, the welfare benefits and costs of protecting IPR before the critical turning point is discussed.