Academic journal article International Journal of Economic Development

III. the Tools of Innovation

Academic journal article International Journal of Economic Development

III. the Tools of Innovation

Article excerpt


Intellectual Property is the Key to Innovation

During 2003, the Multilateral Investment Fund (MIF) of the Inter-American Development Bank (IADB) issued an insightful report analyzing the effectiveness of institutional reform projects it had previously funded during the 1990s to ensure the proper functioning of Latin American markets. These projects identified the protection of private intellectual property rights as one of the "key factors" needed to ensure the competitiveness of firms operating within regional markets. (543)

"Intellectual property is an asset, and as such, has an economic value. Whoever creates, invents, or designs something can protect that creation by using the legal tools contemplated for that purpose by law. By using those tools, legal recognition of the creative activity can be obtained in the form of an intellectual property 'right' which allows us to protect what we have created and prevent others from exploiting it without our consent" (emphasis added). (544)

According to the report, some of these projects focused on reforming and modernizing intellectual property registries to achieve this objective.

... During the 1990s, most of the ... projects in the region aimed to reform and modernize intellectual property registries. They ... charmel[ed] funds for buildings, personnel training courses, the introduction of information technologies and software, and dissemination activities ... These projects have played an important role given that intellectual property registries are components in the system. It is they that are called upon to register patents, trademarks, and industrial designs, analyze applications for new registrations, and keep the records on file" (emphasis added). (545)

The report, furthermore, identified innovation as the linchpin and innovation systems as the facilitator of intellectual property creation.

"innovation is essential for creating intellectual property. The two basic factors of understanding innovation are: (i) the enterprises themselves as creators and administrators of knowledge; and (ii) the national innovation system, as the provider of the environment and resources to generate this know-how" (emphasis added). (546)

Moreover, the report cited the economic benefits that would flow from the various productive uses of innovations protected by intellectual property fights. They include improved brand and market differentiation, acquisition and development of valuable economic assets that may be financially leveraged and increased access to new markets through licensing, franchising, etc. (547 548)

Interestingly, the economic freedom and benefits that can be realized by intellectual property owners that have officially 'registered' their legally recognized rights and collateralized or otherwise exploited (e.g., licensed franchised) their legally protected assets, are analogous to those benefits thus far realized by individuals who have officially registered their informal claims to real property throughout Latin America. In this regard, the Government of Brazil should carefully study the successful program of Peruvian economist Hernando De Soto. That program has enabled poor people living in various Latin American countries to secure official registration and recognition of informal title (deeds) to land that they had long occupied, and such ownership has helped them to realize significant economic benefits. (549 550)

Lastly, the IADB report concluded that many of the obstacles faced in promoting the value of intellectual property in Latin America do not stem not from any lack of appreciation by the private sector for the legal concepts of intellectual property and private property rights in general. Rather, it found that the failure of governments to coordinate with and enhance the ability of (i.e., to enable) local enterprises and academic institutions tu develop, convert, and commercialize their know-how has effectively, denied them the economic benefits from such ownership. …

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