The Economist
14 September 2002

How poor countries can avoid the wrongs of intellectual-property rights

"THE public will learn that patents are artificial stimuli to improvident exertions; that they cheat people by promising what they cannot perform; that they rarely give security to really good inventions, and elevate into importance a number of possible good can ever come of a Patent Law, however admirably it may be framed."

Hardly an argument you might expect The Economist to endorse. And yet this passage appeared in our pages in 1851. In the mid-19th century, The Economist believed that patents hindered rather than helped growth, by restricting the free use of one man's ideas by another. By all means let inventors be rewarded, we argued, but by trying their luck in the open market. Patents, like protection, were an enemy of free trade.

How times change. In today's "knowledge economy", patents seem to be central to western notions of prosperity and international trade. Signing on to the global agreement on intellectual property, called TRIPS, is now part and parcel of membership of the World Trade Organisation.

Most of the world's people live in countries which either do not have, or do not enforce, intellectual-property rights. Not for much longer, however: TRIPS requires even the least-developed countries to have some minimum protection in place by 2006. Whether this is good for the poor is hotly debated. America, which has the most extensive and expensive national-patenting system in the world, preaches that patents help to foster growth in poor places, since they stimulate domestic innovation, boost foreign investment and improve access to new technologies.

Nonsense, retort many poor-country governments. Western-style intellectual-property protection brings many costs and few benefits. Patent systems are expensive to implement, draining scarce money and trained manpower from other more pressing concerns. Patents hurt, rather than help, domestic industries, which are often based more on copying than on innovating. And in the process, western patent rules prevent poor people from getting life-saving drugs, interfere with age-old farming practices and allow foreign "pirates" to raid local biodiversity or traditional handicrafts, without getting permission or paying compensation.

Into this fray now steps a study by an international commission set up by the British government to examine how intellectual-property rights can help or hinder developing countries (see article). It questions the doctrine that patents are good for the poor. There is little evidence to show that truly downtrodden places which introduce robust intellectual-property protection reap any of the much-touted benefits. Certainly, patents matter greatly to some industries, such as pharmaceuticals. But putting in a rigorous patent system will not make Angola a hotspot of biotechnology innovation any time soon; a licence to drive is little use without a car.

For richer, for poorer

Rich countries should remember this when they seek to impose their intellectual-property regime on the rest of the world. It is entirely reasonable for the world's poorest countries to argue that they need until 2016, at least, to adopt and enforce patents on pharmaceuticals. This stay of execution should, indeed, be extended to all forms of intellectual property. Poor countries should also be wary of any provisions in trade deals that try to impose stronger intellectual-property standards than TRIPS requires, or of any moves towards universal, one-size-fits-all patents in such controversial areas as biotechnology. Rich countries should accept that considerations of how intellectual-property rights affect poor countries are not just a concern of overseas-aid agencies, but play a part in broader trade and economic relations too.

That is not to reject intellectual-property rights in the poor world altogether. Applied in the right way and at the right moment in development, they offer opportunities not threats to poor people. Some developing countries, such as India and China, whose industrial-scale copying of other people's products alarms Western businesses, are sufficiently advanced to support the sort of innovation that would benefit from patents. They should bring their systems up to scratch, for the sake of their own industry. Even the poorest countries can profit from well-designed intellectual-property protection. Senegal, for example, has thousands of musicians who would benefit from copyright enforcement.

Carefully worked-out policies for protecting intellectual property will not solve developing countries' bigger problems, such as inadequate health care, lousy schools and sheer poverty. But if they are adapted to fit individual countries' circumstances, they can play a helpful role in nurturing the domestic industries that lasting growth requires.

© The Economist Newspaper Limited, London, 14 September 2002.

Note: The Economist kindly waived its fee for permission to use this article.