University Technology Transfer in Transition
Chapter 4: Developing a Legal System that Supports the Market-based Transactions of Bayh–Dole Strategy
4. Developing a legal system that supports the market-based transactions of a Bayh–Dole strategy Let the laws roll with the times and there will be good government. . . But let the times shift without any alteration in the laws and there will be disorder. – Han Fei Tzu (d. 233 BC), chief theoretician of China’s Legalist school1 Economic actors will invest in the creation, adoption and dissemination of technology if they believe they will receive a profitable return from that effort. Without that belief, it makes little sense for them to invest the time and effort required to undertake such burdensome activities. China’s efforts to create a market-based innovation system would likely go for naught if the market reforms were not supported by a complementary effort to build expectations among its various actors that they can profit from participating in such a system. A country’s legal system can play a major role in providing the expectations needed for economic actors to act productively. A legal system can create confidence in property ownership that incentivizes property owners to develop and employ their property in a productive manner. It can also create confidence in the enforceability of contracts, which substantially reduces the overall cost of economic exchanges. While a formal legal system is not the only technique that policymakers can employ to create the needed expectations,2 it is the dominant approach in industrialized countries and has become a major point of focus in many developing countries.3 One explanation for China’s technology transfer...
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