Intellectual Property and Development: Lessons from Recent Economic Research (World Bank Trade and Development Series)

Annotation International policies toward protecting intellectual property rights have seen profound changes over the past two decades. Rules on how to protect patents, copyright, trademarks and other forms of intellectual property have become a standard component of international trade agreements. Most significantly, during the Uruguay Round of multilateral trade negotiations (1986-94), members of what is today the World Trade Organization (WTO) concluded the Agreement on Trade Related Intellectual Property Rights (TRIPS), which sets out minimum standards of protection that most of the world's economies have to respect. How will developing countries fare in this new international environment? Intellectual Property and Development brings together empirical research that assesses the effects of changing intellectual property regimes on various measures of economic and social performance - ranging from international trade, foreign investment and competition, to innovation and access to new technologies. The studies presented point to an important development dimension to the protection of intellectual property. But a one-size fits all approach to intellectual property is unlikely to work. There is need to adjust intellectual property norms to domestic needs, taking into account developing countries' capacity to innovate, technological needs, and institutional capabilities. In addition, governments need to consider a range of complementary policies to maximize the benefits and reduce the costs of reformed intellectual property regulations. This book will be of interest to students and scholars of international law, particularly in the area of intellectual property rights, international trade, and public policy CONTENTS......Page 7 Editors’ Preface......Page 11 Contributors......Page 13 Abbreviations and Acronyms......Page 15 1 Why We Study Intellectual Property Rights and What We Have Learned......Page 17 Part I INTELLECTUAL PROPERTY, TRADE, FDI, AND INTERNATIONAL LICENSING......Page 33 2 How Stronger Protection of Intellectual Property Rights Affects International Trade Flows......Page 35 3 The Role of Intellectual Property Rights in Encouraging Foreign Direct Investment and Technology Transfer......Page 57 4 Intellectual Property Rights and U.S. and German International Transactions in Manufacturing Industries......Page 91 5 Intellectual Property Rights and Licensing: An Econometric Investigation......Page 127 6 The Composition of Foreign Direct Investment and Protection of Intellectual Property Rights: Evidence from Transition Economies......Page 149 Part II INTELLECTUAL PROPERTY EXHAUSTION AND PARALLEL TRADE......Page 185 7 Entering the Jungle of Intellectual Property Rights Exhaustion and Parallel Importation......Page 187 8 Parallel Imports in a Model of Vertical Distribution: Theory, Evidence, and Policy......Page 205 9 Developing and Distributing Essential Medicines to Poor Countries: The DEFEND Proposal......Page 223 Part III INTELLECTUAL PROPERTY, MARKET STRUCTURE, AND INNOVATION......Page 241 10 Patent Protection, Transnational Corporations, and Market Structure: A Simulation Study of the Indian Pharmaceutical Indus......Page 243 11 Strengthening Intellectual Property Rights in Lebanon......Page 275 12 Intellectual Property Rights and Economic Development in China......Page 311 INDEX......Page 349 8.1 Wholesale Price and Parallel Imports......Page 211 8.2 Profits and Trade Costs......Page 213 8.3 Social Surplus......Page 214 2.1 Definition of High-Technology Aggregate......Page 40 2.2 Maximum Likelihood Estimates for Total Nonfuel Imports......Page 43 2.3 Maximum Likelihood Estimates for Total Nonfuel Exports......Page 45 2.4 Maximum Likelihood Estimates for High-Technology Imports......Page 47 2.5 Maximum Likelihood Estimates for High-Technology Exports......Page 49 3.1 Total FDI Flows, Selected Countries (US$ million)......Page 60 3.2 Net Receipts on Royalties, License Fees, Business Services, and Direct Investment Income, Selected Countries (US$ million......Page 62 3.3 U.S. FDI Position in Selected Countries (US$ million)......Page 63 3.4 U.S. FDI Position by Major Sector in Selected Countries, 1994 (US$ million)......Page 65 3.5 Indicators of Multinational Activity in U.S. High-Technology Industries, 1989......Page 68 3.6 Percentage of Firms Claiming that the Strength or Weakness of IPRs Has a Strong Effect on Whether Direct Investments Will Be Made,by Type of F cility,1991......Page 73 3.7 Percentage of Firms Claiming that Intellectual Property Protection Is Too Weak to Permit Types of Investment, 1991......Page 74 3.8 Elasticities of Modes of Supply with Respect to Domestic Characteristics and Policies......Page 80 4.1 U.S. International Transactions in Total Manufacturing: Ordinary Least Squares Estimates......Page 99 4.2 U.S. International Transactions in Total Manufacturing: Maximum Likelihood Estimates......Page 100 4.3 U.S. International Transactions in Individual Manufacturing Industries: OLS Estimates......Page 102 4.4 U.S. International Transactions in Four Manufacturing Industries: Pooled Ordinary Least Squares Estimates......Page 105 4.5 U.S. Arm’s-Length Exports and Sales by Affiliates in Total Manufacturing: OLS Estimates......Page 108 4.6 U.S. Arm’s-Length Exports and Sales by Affiliates in Individual Manufacturing Industries: OLS Estimates......Page 109 4.7 U.S. Arm’s-Length Exports and Sales by Affiliates in Three Manufacturing Industries: Pooled OLS Estimates......Page 111 4.8 German Total Exports and FDI Stocks in Four Manufacturing Industries: Pooled OLS Estimates......Page 114 4.9 German Receipts for Patents, Inventions, and Processes in Six Manufacturing Categories: Tobit Maximum Likelihood Estimate......Page 117 5.1 Summary Statistics and Correlation Coefficients (NT=69)......Page 137 5.2 Estimation of Determinants of Licensing Volumes......Page 138 5.3 Fixed-Effects Model with Heteroskedasticity-Consistent Standard Errors......Page 144 6.1 Measures of IPR Protection......Page 157 6.2 IPR Index Based on IIPA Special 301 Watch List Recommendations......Page 158 6.3 Probit Results with Ginarte-Park Index of Patent Rights Protection......Page 161 6.4 Probit Results with IPR Index......Page 164 6.5 Bivariate Probit with Sample Selection: Manufacturing versus Distribution Projects (Ginarte-Park Index)......Page 168 6.6 Bivariate Probit with Sample Selection: Manufacturing vs. Distribution Projects (IPR Index)......Page 172 6.A.1 Results of OLS Regressions......Page 176 6.A.2 Multinomial Logit Results: Manufacturing versus Distribution Projects versus No FDI......Page 178 8.1 Summary of Exhaustion Regimes......Page 209 8.2 Product Categories......Page 217 8.3 Estimation of Vertical Pricing Model......Page 219 9.1 Deaths and DALYs Caused by HIV/AIDS, TB, and Malaria, 1999 (thousands)......Page 227 9.2 International Price Comparison for a Selection of HIV/AIDS Drugs: Prices in South Africa, Sweden, and the United States,......Page 229 9.3 International Price Comparison for a Selection of HIV/AIDS Drugs: Prices as a Share of GDP Per Capita (percent)......Page 230 10.1 Quinolones: Overview......Page 255 10.2 Hypotensives: Overview......Page 256 10.3 Quinolones—Calibrated Weight Parameters......Page 258 10.5 Quinolones—Average Profit Margins (percent)......Page 259 10.6 Hypotensives—Average Profit Margins (percent)......Page 260 10.7 Quinolones—Simulation......Page 262 10.8 Hypotensives—Simulation......Page 263 10.9 Quinolones—Simulated Consumer Welfare Losses (Rs thousands)......Page 265 10.10 Hypotensives—Simulated Consumer Welfare Losses (Rs thousands)......Page 266 11.1 Static Effects of Stronger Patent and Trademark Protection on Pharmaceuticals Firms......Page 286 11.2 Simulated Effects of Stronger Copyrights on Software......Page 295 11.3 Effects of Stronger Copyrights on Printing and Publishing......Page 300 11.4 Effects of Stronger Copyrights on Music and Video, and Film Industries......Page 303 12.1 Estimates of Percentage Piracy Rates for Copyright Goods, 1996–97......Page 320 12.2 Patent Applications by Type and Nationality, 1990–2000......Page 331 12.3 Patent Grants by Type and Nationality, 1990–2000......Page 332 12.4 Patenting Indicators for Top 11 Patenting Regions, 1985–96......Page 333 12.5 Trademark Applications and Registrations......Page 334 12.6 Trademarking Indicators for Top 10 Trademarking Regions, 1996......Page 335 12.7 International Comparisons of Science and Technology Indicators, Recent Years......Page 336 12.8 Science and Technology Indicators by Region, 1995......Page 337 CONTENTS 7 Editors’ Preface 11 Contributors 13 Abbreviations and Acronyms 15 1 Why We Study Intellectual Property Rights and What We Have Learned 17 Part I INTELLECTUAL PROPERTY, TRADE, FDI, AND INTERNATIONAL LICENSING 33 2 How Stronger Protection of Intellectual Property Rights Affects International Trade Flows 35 3 The Role of Intellectual Property Rights in Encouraging Foreign Direct Investment and Technology Transfer 57 4 Intellectual Property Rights and U.S. and German International Transactions in Manufacturing Industries 91 5 Intellectual Property Rights and Licensing: An Econometric Investigation 127 6 The Composition of Foreign Direct Investment and Protection of Intellectual Property Rights: Evidence from Transition Economies 149 Part II INTELLECTUAL PROPERTY EXHAUSTION AND PARALLEL TRADE 185 7 Entering the Jungle of Intellectual Property Rights Exhaustion and Parallel Importation 187 8 Parallel Imports in a Model of Vertical Distribution: Theory, Evidence, and Policy 205 9 Developing and Distributing Essential Medicines to Poor Countries: The DEFEND Proposal 223 Part III INTELLECTUAL PROPERTY, MARKET STRUCTURE, AND INNOVATION 241 10 Patent Protection, Transnational Corporations, and Market Structure: A Simulation Study of the Indian Pharmaceutical Indus 243 11 Strengthening Intellectual Property Rights in Lebanon 275 12 Intellectual Property Rights and Economic Development in China 311 INDEX 349 Figures 211 8.1 Wholesale Price and Parallel Imports 211 8.2 Profits and Trade Costs 213 8.3 Social Surplus 214 Tables 40 2.1 Definition of High-Technology Aggregate 40 2.2 Maximum Likelihood Estimates for Total Nonfuel Imports 43 2.3 Maximum Likelihood Estimates for Total Nonfuel Exports 45 2.4 Maximum Likelihood Estimates for High-Technology Imports 47 2.5 Maximum Likelihood Estimates for High-Technology Exports 49 3.1 Total FDI Flows, Selected Countries (US$ million) 60 3.2 Net Receipts on Royalties, License Fees, Business Services, and Direct Investment Income, Selected Countries (US$ million 62 3.3 U.S. FDI Position in Selected Countries (US$ million) 63 3.4 U.S. FDI Position by Major Sector in Selected Countries, 1994 (US$ million) 65 3.5 Indicators of Multinational Activity in U.S. High-Technology Industries, 1989 68 3.6 Percentage of Firms Claiming that the Strength or Weakness of IPRs Has a Strong Effect on Whether Direct Investments Will Be Made,by Type of F cility,1991 73 3.7 Percentage of Firms Claiming that Intellectual Property Protection Is Too Weak to Permit Types of Investment, 1991 74 3.8 Elasticities of Modes of Supply with Respect to Domestic Characteristics and Policies 80 4.1 U.S. International Transactions in Total Manufacturing: Ordinary Least Squares Estimates 99 4.2 U.S. International Transactions in Total Manufacturing: Maximum Likelihood Estimates 100 4.3 U.S. International Transactions in Individual Manufacturing Industries: OLS Estimates 102 4.4 U.S. International Transactions in Four Manufacturing Industries: Pooled Ordinary Least Squares Estimates 105 4.5 U.S. Arm’s-Length Exports and Sales by Affiliates in Total Manufacturing: OLS Estimates 108 4.6 U.S. Arm’s-Length Exports and Sales by Affiliates in Individual Manufacturing Industries: OLS Estimates 109 4.7 U.S. Arm’s-Length Exports and Sales by Affiliates in Three Manufacturing Industries: Pooled OLS Estimates 111 4.8 German Total Exports and FDI Stocks in Four Manufacturing Industries: Pooled OLS Estimates 114 4.9 German Receipts for Patents, Inventions, and Processes in Six Manufacturing Categories: Tobit Maximum Likelihood Estimate 117 5.1 Summary Statistics and Correlation Coefficients (NT=69) 137 5.2 Estimation of Determinants of Licensing Volumes 138 5.3 Fixed-Effects Model with Heteroskedasticity-Consistent Standard Errors 144 6.1 Measures of IPR Protection 157 6.2 IPR Index Based on IIPA Special 301 Watch List Recommendations 158 6.3 Probit Results with Ginarte-Park Index of Patent Rights Protection 161 6.4 Probit Results with IPR Index 164 6.5 Bivariate Probit with Sample Selection: Manufacturing versus Distribution Projects (Ginarte-Park Index) 168 6.6 Bivariate Probit with Sample Selection: Manufacturing vs. Distribution Projects (IPR Index) 172 6.A.1 Results of OLS Regressions 176 6.A.2 Multinomial Logit Results: Manufacturing versus Distribution Projects versus No FDI 178 8.1 Summary of Exhaustion Regimes 209 8.2 Product Categories 217 8.3 Estimation of Vertical Pricing Model 219 9.1 Deaths and DALYs Caused by HIV/AIDS, TB, and Malaria, 1999 (thousands) 227 9.2 International Price Comparison for a Selection of HIV/AIDS Drugs: Prices in South Africa, Sweden, and the United States, 229 9.3 International Price Comparison for a Selection of HIV/AIDS Drugs: Prices as a Share of GDP Per Capita (percent) 230 10.1 Quinolones: Overview 255 10.2 Hypotensives: Overview 256 10.3 Quinolones—Calibrated Weight Parameters 258 10.4 Hypotensives—Calibrated Weight Parameters 259 10.5 Quinolones—Average Profit Margins (percent) 259 10.6 Hypotensives—Average Profit Margins (percent) 260 10.7 Quinolones—Simulation 262 10.8 Hypotensives—Simulation 263 10.9 Quinolones—Simulated Consumer Welfare Losses (Rs thousands) 265 10.10 Hypotensives—Simulated Consumer Welfare Losses (Rs thousands) 266 11.1 Static Effects of Stronger Patent and Trademark Protection on Pharmaceuticals Firms 286 11.2 Simulated Effects of Stronger Copyrights on Software 295 11.3 Effects of Stronger Copyrights on Printing and Publishing 300 11.4 Effects of Stronger Copyrights on Music and Video, and Film Industries 303 12.1 Estimates of Percentage Piracy Rates for Copyright Goods, 1996–97 320 12.2 Patent Applications by Type and Nationality, 1990–2000 331 12.3 Patent Grants by Type and Nationality, 1990–2000 332 12.4 Patenting Indicators for Top 11 Patenting Regions, 1985–96 333 12.5 Trademark Applications and Registrations 334 12.6 Trademarking Indicators for Top 10 Trademarking Regions, 1996 335 12.7 International Comparisons of Science and Technology Indicators, Recent Years 336 12.8 Science and Technology Indicators by Region, 1995 337 In The Mid-1990s, The World Trade Organization Developed The Agreement On Trade-related Aspects Of Intellectual Property Rights (trips), Which Sets Out Minimum Standards Of Ipr Protection. The World Bank Has Held Keen Interest In Better Understanding How Well-designed Intellectual Property Policies Can Help Foster Development And Reduce Poverty. This Volume Brings Together Studies Conducted By World Bank Or Bank-affiliated Economic Researchers Who Seek To Better Understand The Economic Underpinnings Of The Different Degrees And Forms Of Ipr Protection.--jacket. Why We Study Intellectual Property Rights And What We Have Learned / Carsten Fink And Keith E. Maskus. Intellectual Property, Trade, Fdi, And International Licensing. How Stronger Protection Of Intellectual Property Rights Affects International Trade Flows / Carsten Fink And Carlos A. Primo Braga -- The Role Of Intellectual Property Rights In Encouraging Foreign Direct Investment And Technology Transfer / Keith E. Maskus -- Intellectual Property Rights And U.s. And German International Transactions In Manufacturing Industries / Carsten Fink -- Intellectual Property Rights And Licensing : An Econometric Investigation / Guifang (lynn) Yang And Keith E. Maskus -- The Composition Of Foreign Direct Investment And Protection Of Intellectual Property Rights : Evidence From Transition Economies / Beata Smarzynska Javorcik. Intellectual Property Exhaustion And Parallel Trade. Entering The Jungle Of Intellectual Property Rights Exhaustion And Parallel Importation / Carsten Fink -- Parallel Imports In A Model Of Vertical Distribution : Theory, Evidence, And Policy / Keith E. Maskus And Yongmin Chen -- Developing And Distributing Essential Medicines To Poor Countries : The Defend Proposal / Mattias Ganslandt, Keith E. Maskus, And Eina V. Wong. Intellectual Property, Market Structure, And Innovation. Patent Protection, Transnational Corporations, And Market Structure : A Simulation Study Of The Indian Pharmaceutical Industry / Carsten Fink -- Strengthening Intellectual Property Rights In Lebanon / Keith E. Maskus -- Intellectual Property Rights And Economic Development In China / Keith E. Maskus, Sean M. Dougherty, And Andrew Mertha. Edited By Carsten Fink And Keith E. Maskus. Includes Bibliographical References And Index. International policies towards protecting intellectual property rights have seen profound changes over the past two decades. Rules on how to protect patents, copyright, trademarks and other forms of intellectual property have become a standard component of international trade agreements. Most significantly, during the Uruguay Round of multilateral trade negotiations (1986-94), members of what is today the World Trade Organization (WTO) concluded the Agreement on Trade Related Intellectual Property Rights (TRIPS), which sets out minimum standards of protection that most of the worlds economies have to respect. How will developing countries fare in this new international environment? This book brings together empirical research that assesses the effects of changing intellectual property regimes on various measures of economic and social performance ranging from international trade, foreign investment and competition to innovation and access to new technologies. The studies presented point to an important development dimension to the protection of intellectual property. But a one-size-fits-all approach to intellectual property is unlikely to work. There is need to adjust intellectual property norms to domestic needs, taking into account developing countries capacity to innovate, technological needs, and institutional capabilities. In addition, governments need to consider a range of complementary policies to maximize the benefits and reduce the costs of reformed intellectual property regulations. It will be of interest to students and scholars of international law, particularly in the area of intellectual property rights, international trade and public policy.