Evidence and Experience from Developing Countries
Edited by Sunil Mani and Richard R. Nelson
Chapter 2: Innovation in the pharmaceutical industry in Brazil post-TRIPS
Although intellectual property rights, such as patents, have been recognized in Brazil since the early nineteenth century, they played a very modest role in the economic development of the country. Industrial policies of import substitution between the 1950s and 1980s and high inflation produced a diversified industry, but with little incentive to innovate. However, IPR may become more important given the new economic context of the country. In the 1990s structural and macroeconomic changes occurred, including the opening of the market, inflation control and institutional reforms such as privatization. In the 2000s there was a significant economic growth associated with reduction in income inequality that has expanded the consumer demand. All these factors contributed to attracting FDI. On the other hand, the increase in the international prices of commodities contributed to the appreciation of the real, leading the country to experience the ëDutch diseaseí. This fact contributed to raise the debate on the premature process of de-industrialization which Brazil is going through. Industry, which represented 22 per cent of GDP in the 1970s, represented only 14 per cent in 2011. It was precisely in the early formation of this new economic context that Brazil passed a TRIPS compliance patent law in 1996. What are the effects of a stronger IPR regime on the innovative behavior in this new context? Our results suggest that it is not possible to state that the TRIPS compliance has hindered innovation in Brazil.
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