Analysing Intellectual Property Rights Economics Essay

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Developing countries have demanded the implementation of intellectual property rights by the developed nations. Protection of the innovations from the illegal copying and imitation in developing countries is the main concerns of developed countries. Since last two decades both developed nations and developing nations are intense. Therefore the protection of innovation is extended from mechanical equipments to organism and innovation to discovery. David (2000) too comments that protection of innovation is necessary from the information technology to researched scientific information. Economic implications are the concerns of developing countries to implement the intellectual properties in their respective countries. Intellectual properties in the developing countries are main driving forces for the high technology cost and barriers for the technology access to public. According to the developing nations these intellectual properties are more beneficial if developed nation do not imply the economic conditions.

Intellectual property rights are the incentives to promote the developments in the developing countries. World Trade Organization (WTO) adhere those agreements related to trade and intellectual property rights. IPRs are the necessary motives to promote the future innovations and providing the ways to make access of products in a competitive market. The intellectual properties are based on the new inventions; commercial information and entertainment products; trade and software are created in the industrial countries. Countries may take advantages of their standards in an appropriate and flexible ways while completing and developing these trade standards with competition regimes. Developing countries make contacts with the rich nations in order to access the additional resources of those countries like agriculture and apparel markets under the Trade Related Intellectual Property Rights (TRIPS). Developing countries percept that IPRs would encourage them to transfer the innovation and technology. However these achievements for the poor countries prove to be costly because of high administrative costs and higher prices of technology. Policy makers push the significant agreements revisions due to these consequences. IPRs have positive impacts on the growth prospects. As IPRs are directly related with foreign direct investment (FDI) and greater trade results in rapid economic growth. Poor countries cannot absorb the high costs may find an advantage from the domestic innovations and stage implementation of some of its aspects. Industrial countries largely derive benefits from the IPRs, while developing countries face the given challenges and help the poor countries to implement the TRIPS. Life saving drugs and vaccines are costly and poor countries need these medicines. On the other hand pharmaceutical companies demand the higher prices for these drugs and a new innovation is needed to provide these costly medicines al low cost to poor countries. Intellectual property rights strike the balance between the society requirements by encouraging the innovations and public access to new technologies. IPRs are also chosen by the states to face the economic challenges. When countries decide their policy the IRPs are strongly adopted when domestic interest goes in their favour. Countries with high rate of GDP and high numbers of scientists and engineers have strong patent values than others. Technology diffusion occurs by the import and export of goods. Rise in productivity and reduction in cost can be achieved by the technology inputs and imports of goods. According to Maskus and Penubarti (1995) changes in imports of goods and high technology products can be induced by the use of strong copyrights. The IPRs have impacted the changes in import volumes in developing countries. Mexico and China’s high technology imports are the best examples to prove the long-run impacts which are too substantial.

We have discussed the advantages of the IPRs which require a very complex situation to implement it fully. These exclusive and broad rights pose very serious problems of thickening of the legal rights. It is claimed by the rights holder that technology objects increase the number of intellectual property rights. However it is also highly observed that intellectual property rights may need the level and scope of protection. In this way new rights are created and existing are expanded (Inge &Hanns, 2007). When it is correct that IPRs have negative effects on the trade; we can draw a relationship between the IP-rights and competition law. TRIPS agreements may create the problems as the production of new and safe drugs for the market is financially a risky endeavour. When chemical research and other related trials are undertaken and prove successful, there is the lengthy approval process ahead (Pogge, 2005). It can be further explained as the inventor firm of medicines introduces a new innovation in the market; other companies in market copy this innovation and bear no cost in terms of R&D and sell that product at low prices. In this way the marginal cost of that product is driven down and inventor firm will be unable to bear the loss of R&D costs. TRIPS are more useful for the developing countries in two different ways; directly affecting the technology transfer in developing countries (DCs) and least developing countries (LDCs); indirectly affect the technology capabilities in these countries. These direct and indirect effects enhance the country’s ability to create and absorb new technologies.

Introduction of IPRs for Medicine companies creates market failure as the mutually beneficial transactions do not occur between the seller and buyer. When licensing is made compulsory then numbers of problems are cited. World Trade Organization (WTO) only allows the nations to issue the licenses which can produce the drugs for the domestic consumption. It meant that compulsory licensing cannot help those nations that lacked such drugs manufacturing capacity (Reichman 2009:248).

Intellectual property rights are the important instrument to promote the production of the creative work which serves socially rather than individually. There are many other factors which prove that positive consequences of IPRs dominate the negative consequences. Developed countries exhibit the industrialization due to strong IPRs as compared to developing nations with weaker IPRs. Positive effects of IPRs on knowledge diffusion outweigh the negative effects through the knowledge diffusion. (Castellani and Zanfei, 2006) argue that under the established conditions negative effects of IPRs are dominated by the positive effects and suspicious issue concerning the IPRs can be solved.

Agencies in the US, EU, Canada and National governments must play their roles and reserve the funds for the research for the specific projects in Developing countries. These funds must be given on competitive base to those research teams which collaborate with other agencies involved in these activities. Sabatelli (1995) notes

The reluctance of national governments to give up their current systems which allow them to use their patent laws to favor domestic entrepreneurs (Sabatelli, 1995).

Developed countries can be pushed by the developing countries to transfer the new innovation in the form of the technology transfer. However national governments may adopt the collective international measures combined with the new regimes to protect and attain the public goods. National government can go ahead to ease the burden on the Least developed and developing countries. From developing countries US has pursued the intellectual property as coercion for the developing nations and especially for the trade partners including the China, Argentina, Brazil and India etc. For such purposes US negotiated the Hungry, Taiwan, Singapore and South Korea. Except China US has become a large importer of goods from these countries. U.S. is making efforts to implement the trade strategies of intellectual property rights to make them intellectual regimes. It proved to be a very lucrative incentive for the developing nations and present economical conditions of such nations have become apparent. Physical possessions of items have changed the mind of the property rights holder as they exclude others to use these items. Right holders of intellectual property have very limited exclusionary provisions. Physical assets are different from the aspects of intellectual properties having difficulty in confining use. Ability can be contrasted with the knowledge of loss of control over the physical product after it is traded. Intellectual property rights are directed towards the commercial use and not their actual use. There exists a main difference between the physical asset and intellectual property; former is recognized as rival and latter is non-rival. The information of one person can’t be same to other persons in future or at the same time.


Intellectual property rights are discussed with key examples to highlight the importance for the developing and least developing countries. It is also discussed that how the IPRs have grown the international trade during the last three decades. Positive and negative effects of IPRs in international trade are revealed by the policy makers and economists. The comparison of positive and negative consequence of international trade in IPRs has presented domination of the positive consequences. Role of the developed countries is appreciated for the IPRs development in DCs and LDCs. Finally the ways of difference between international trade in Intellectual property rights and physical products are included in this paper.