Keith E. Maskus
The global economy continues to see considerable progress in the development and use of technologies and products characterising the so-called 'new economy'. In such areas as computer software, personal computers, electronic commerce, internet transmission of digital products, telecommunications, compilation of databases and biogenetics, innovation has at its core the development and use of information. Information is often costly to produce but is essentially a public good: non-rival and difficult to exclude without legal protection. Thus, intellectual property rights (IPRs)-patents, copyrights, trademarks, trade secrets, and related devices-have become a central issue in countries that wish to promote such innovation.
The existence or prospect of the exclusive rights awarded by IPRs can be important in determining the ability of entrepreneurs and firms to attract capital for their R&D and expansion programs. In advanced innovation systems there is an important complementarity between capital spending (including R&D) and the protection of new technology and market positions through IPRs. However, while IPRs promote innovation and encourage commercialisation of new information products, they also support market exclusivity that can restrict access to consumers and limit competition by rival enterprises. In that context, excessive protection for intellectual property can distort capital allocation and retard productivity growth.
As always in the IPR area, there is a tradeoff between encouraging invention through protected market positions and promoting access to new information and innovative competition by rival firms. For countries of East Asia and the Pacific region, it is not easy to strike the right balance between strong protection, favouring original innovators, and limited protection, favouring imitation and access. The interests of Japan, Malaysia and Vietnam are as different from one another as are those of the United States, Mexico and Guatemala. A 'one-size-fits all' approach in the Asia Pacific region might lead to some rationalisation gains from policy similarity, but is unlikely to meet the needs of all countries.