Innovation, Intellectual Property, and Development: A Better Set of Approaches for the 21st Century
Co-authored by Joseph E. Stiglitz
AccessIBSA: Innovation & Access to Medicines in India, Brazil & South Africa – July 2017
The twenty first century global economy will differ from that of the twentieth in at least two critical ways. First, the weight of the developing world in the global economy will be substantially higher. In particular, emerging economies such as China, Brazil, India and South Africa will have a more important role to play based on their pace of growth. Second, the ‘weightless economy‘ – the economy of ideas, knowledge and information – will become an increasingly important fraction of economic output and ever more important for economic growth and development, both in developed and developing economies.
These two facts alone would suggest that economic institutions and laws created in the twentieth century, to manage the growth of currently advanced industrialised economies, will be increasingly inadequate to govern global economic activity. Nowhere is this more evident than in the area of intellectual property rights (IPRs). Today’s global intellectual property regimes have been strongly affected by the historical evolution of IPR in the United States and in the advanced industrialised countries over the last century. Certainly, the adoption of the World Trade Organization’s Trade Related Intellectual Property System (TRIPS) reflects the understanding of the management of intellectual and knowledge advancement that prevailed in the last quarter of the previous century and the structure of economic power at that moment.
Perhaps somewhat ironically the world has coalesced on a set of institutions to manage knowledge advancement just as advanced industrialised economies have begun to run up against the severe impediments that this system entails – a system that they thought had been designed by and for themselves. Nowadays, it is widely recognised that the management of innovation in countries like the US has been sub-optimal and led to a situation that is increasingly litigious and plagued by conflicts. In fields such as information technology, a whole set of weak patents and an epidemic of over-patenting has made subsequent innovation difficult and has eroded some of the gains from knowledge creation (see Bessen and Meurer, 2008 among others). Moreover, in some areas, such as in pharmaceuticals, ever-stronger IP protections has not necessarily led to an increase in the discovery of new chemical entities (see Dosi and Stiglitz, 2014). Rather, the demands and needs of different industries become more opposed, leading to serious concerns for policy makers. There is a shrinking of the knowledge commons as even publicly funded and promoted innovation is privatised,5 thereby reducing both equity and efficiency. There is no agreement on what exactly ought to be done, but it is certainly recognised that the current system is not satisfactory for developed countries.
This dissatisfaction with the current regime is magnified in the case of developing countries. Ever since the adoption of TRIPS, it has become increasingly clear that the intellectual property provisions of the WTO are not well-aligned with the needs of developing countries and that they serve corporate interests in developed countries disproportionately. These conflicts become more pronounced over time. For example, in the case of extending patent protection to global pharmaceutical companies at the expense of the health of the poor, or extending copyright for books well past the time needed to compensate the author, thereby limiting access to books and educational materials in developing countries.
If the knowledge economy and the economy of ideas is to be a key part of the global economy and if static societies are to be transformed into ‘learning societies’ that are key for growth and development (see Greenwald and Stiglitz, 2006, 2014 for more on this theme), there is a desperate need to rethink the current regime and to allow for a much less restrictive flow of information and knowledge. Moreover, if we are considering questions of ethics, the current regime is deeply regressive and inefficient as we will show.