The Copyright Dilemma: Copyright Systems, Innovation and Economic Development

Article excerpt

This paper discusses the potential role of copyright laws in technological and economic development. Although it is more common to think of the patent system as a source of economic and technological development, copyright laws and regulations affect cultural industries such as art, films, music and literature. These industries comprise an important part of gross domestic product and are a source of employment and income opportunities. Copyright regimes also affect education and scientific research through their impacts on the diffusion of knowledge embodied in copyright media, such as print and Internet publications, software and databases, among others. The copyright system can thus have an important influence on human capital accumulation. This paper surveys some of the theoretical and empirical work to date, assesses the implications of the findings for developing economies and identifies some areas where further research is needed.

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Intellectual property rights are among the most important factors affecting technological progress and economic development. Thus far, most intellectual property rights research has focused on the role of patent protection rather than on other kinds of intellectual property rights, such as copyright protection. This is not surprising, since industrial inventors often look to patent rights for the protection of their innovations. However, the creation of copyright industries can also influence technological and economic change. This paper discusses the potential economic impacts of copyright laws and surveys existing theoretical and empirical work. The objective is to draw implications for economic development and to identify some issues in need of more research. The survey and discussion of issues will focus on the impacts of copyrights on innovation and creativity, since these are key determinants of economic development, but will not treat issues related to the operation and administration of copyright systems. (1)

Copyrights can have both positive and negative influences on creative activity. As a result, debates about copyright policies should focus not so much on the desirability of strict or lax copyright protection, but on the appropriate design of copyright systems. For example, the standards of copyright protection in developing economies should be appropriate for their level of economic development in order to account for the different weighting of the costs and benefits of copyright protection. Furthermore, the copyright system influences not only commercial activities, but also non-commercial ones. Researchers investigating only the commercial impacts of copyright laws--for example, on production, sales and employment--will likely undervalue the overall social impacts. Copyright policies, for example, can have effects on basic education and fundamental research, both of which are important inputs into commercial activity. (2) Moreover, while copyright systems can influence economic development, they are also a function of economic development; that is, the value of copyright protection is greater in more advanced markets. Consequently, in less developed markets, the incentives for policymakers and stakeholders to invest in the copyright regime are generally weaker. The problem in this situation is that copyright protection and enforcement may be too weak to stimulate creativity in copyrightable works. Copyright industries would then remain too underdeveloped to have an impact on economic and technological development. These points suggest directions for further research, namely to assess the significance of copyright laws for non-commercial activities such as basic research and human capital accumulation, and to analyze the interdependence between the copyright regime and the level of economic development.

WHAT ARE THE COPYRIGHT INDUSTRIES?

In 2003, the World Intellectual Property Organization (WIPO) issued standardized guidelines that provide a formal definition of copyright industries. …