Despite centuries of patent protection and policy reforms, solid evidence that exclusive rights induce significant increases in innovation and technology diffusion remains elusive. This lacuna is unfortunate, for it permits pro- and anti-patent observers to make strong claims in the absence of systematic evidence. This article analyses why this situation persists, emphasizing the extreme complexity of the patent–innovation relationship and noting that shortcomings in available statistics are a key barrier to overcoming the problem. Evidence to date that patent protection encourages innovation and growth is mixed and context-specific. While there are stronger indications that it facilitates technology transfer, this conclusion must be heavily qualified. Economists have yet to tackle more difficult questions, relating to public goods provision, which could inform thinking about patents and development. Suggestions are offered regarding how to improve data and analysis in this critical area. Key Words Patents, innovation, economic development, statistical evidence
Keith E. Maskus
This chapter reviews evidence regarding several of the most important relationships between intellectual property rights (IPRs) and economic development. Theoretical analysis generally yields ambiguous predictions, while empirical analysis suffers from the lack of data on key questions. Nonetheless, several interesting findings are discussed. First recent research suggests that patent reforms can expand innovation in emerging countries with sound facilitating conditions. Second, patent reforms in emerging countries have attracted significantly higher inward flows of technology and encouraged the development of export sectors. However, such processes are absent in the poorest countries. Third, simulation models suggest that new patent regimes could raise pharmaceutical prices in developing countries. Recent empirical evidence, however, suggests that this effect may be offset by other factors. Moreover, stronger patent protection induces faster product launches in reforming countries. Thus, the impact of patents on access to medicines in developing economies may not be as negative as often feared.