Intellectual Property Rights, Innovation, and Economic Growth in Sub-Saharan Africa

By Adams, Samuel | Journal of Third World Studies, Spring 2011 | Go to article overview

Intellectual Property Rights, Innovation, and Economic Growth in Sub-Saharan Africa


Adams, Samuel, Journal of Third World Studies


INTRODUCTION

In the era of globalization, knowledge and innovation play significant roles in economic activity. The protection of intellectual property rights (IPR) has therefore gained prominence in economic development literature because it motivates technological change, which is essential for economic growth. (1) In this paper, we define IPR as the rules on how to protect patents, copyrights, trademarks, and trade secrets that have become a standard component of international trade agreements. (2) Over the past decade, the protection of IPR has moved from an arcane area of legal analysis and a policy backwater to the forefront of global economic policymaking. (3) This in no small measure has been motivated by the successful completion of the World Trade Organization's (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) in 1994. The TRIPS agreement sets strong minimum standards in each of the areas commonly associated with IPR, which includes patents, copyrights, trademarks, and trade secrets. (4)

The creation of an effective IPR regime has an effect on the incentive for new knowledge creation and its dissemination, the market structure, and consumer welfare. A growing number of experts, however, question the positive effect of IPR on economic performance in the context of developing countries and argue that the protection of IPRs do little to stimulate innovation in these countries. (5) Leger (2005) observed that the very low innovative capabilities of the less developed countries limit the potential of IPR to support local innovation. (6) Helpman noted that if any one benefits from IPR protection, it is certainly not the Global South (i.e., developing countries). (7)

In recent times, many studies have been conducted to ascertain the impact of IPR on economic growth. Unfortunately, however, there has been little focus on SSA. Consequently, the empirical evidence cited for the positive effects of I PR have been that which pertain to developing countries as a whole. The generalizability of such studies, however, is limited as the developing country group is far from being homogenous. They differ politically, socioculturally, and in the areas of income and wealth. They also differ in their scientific and technical capacities. (8) Braga and Fink, for example, suggested that regional and cross-country differences influence the effect of IPR on an economy. A regional study that focuses exclusively on SSA will therefore help to reduce any bias due to regional variations. (9)

The rest of the paper is organized as follows: Section two discusses the theoretical and empirical literature on the relationships between IPR and economic growth. Section three presents the research methodology, while section four presents and analyzes the results. Section five gives the implications, directions for future research, and offers concluding remarks.

LITERATURE REVIEW

Intellectual property rights have been recognized as part of the infrastructure supporting investments in Research and Development (R&D) leading to innovation and subsequent economic growth. (10) Obviously, if economic agents innovate to capture or hold a share of the market they would not retain otherwise, then protection of property rights might boost long--run growth. (11)

By granting temporary exclusive rights on inventions, it allows the right-holders to price their products above marginal cost, and hence recoup their initial research investment. Such exclusive rights create incentives for the conduct of R&D, which contributes to the promotion of technological innovation and the transfer and dissemination of technology, in a manner conducive to social and economic welfare. (12) As noted by Boldrin and Levine, no economic agent exercises productive effort without the certainty of controlling its fruits. (13) The strengthening of IPR will therefore ensure that a country's resources are allocated to the most valuable uses. …

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