Institutions and Intellectual Property Reform in Developing Countries

The years since 1990 have witnessed an international wave of reform and institutional change with respect to intellectual property rights (IPRs), driven in part by international trade liberalisation and economic transition (the latter in the former socialist countries). Many developing countries undertook new intellectual property-related commitments under various international agreements administered by the World Trade Organisation and the World Intellectual Property Organisation. These commitments are reflected in changes in domestic law and practice that tend to strengthen intellectual property rights – albeit in some cases with a significant lag and variation in application. A key element in this process is the World

Trade Organisation’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which came into effect in 1995. The TRIPS Agreement established minimum intellectual property standards and a framework to review and enforce these standards.

This wave of IPR reform continues to roll out around the world, including in a number of developing countries where the initial protection of IPRs was weak at best. In some cases, their IPR standards are beginning to approach the high levels found in the advanced economies. Moreover, the strength of IPRs is correlated with the strength of certain other key institutional variables, and some developing countries appear to be taking a strategic approach to IPR reform as one part of their larger economic development strategies. That is, improved performance in the area of IPRs may be accompanied by improved performance in other certain other areas targeted for institutional reform (e.g. competition policy). These developments may be contributing to better conditions for economic performance in the reforming countries. For example, some empirical studies – controlling for other factors – are pointing to a positive association of strengthened IPRs in developing countries with progress in certain other variables for economic performance including imports (e.g. of high technology products), foreign direct investment, technology transfer and domestic innovation, albeit with some variation by sector and country.

The global economy has become increasingly integrated as technological advances, trade and investment liberalisation, reform in transition countries, institutional change and other factors have come together to break down barriers and increase international economic possibilities. The multilateral trading system has played a major role in promotion of economic integration, in part by influencing the evolution of institutions related to intellectual property rights in developing countries. In view of the increasing globalisation of markets and the establishment of international standards for IPR protection, competitive pressures are challenging growth-oriented developing countries to address any basic shortcomings in their national IPR regimes. Conformity with the minimum global IPR standards has become, in effect, a prerequisite for developing countries wishing to access and exploit the full range of global technologies and know-how.