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24 J. World Trade 75 (1990)
Benefits and Costs of Intellectual Property Protection in Developing Countries

handle is hein.kluwer/jwt0024 and id is 587 raw text is: Benefits and Costs of Intellectual Property
Protection in Developing Countries
Richard T. RAPP and Richard P. RozEK*
I.  INTRODUCTION
Economic development is a complex process by which countries improve the
economic welfare of their citizens and expand their influence in the world. Many
treatises have been written on the factors that economists associate with successful
development efforts.1 In all modern treatments of the subject, technological change is
understood to be an engine of economic development. Economic growth, which
means output growing faster than population, requires increases in productivity.
Increases in productivity require technological innovation so that a country can
produce more output with a given set of resources. Innovation makes it possible for an
economy to increase the output of products as well as to develop new products that
enhance the quality of life or enable society to produce yet more goods and services.
In modern and pre-modern societies, the rate of innovation is subject to
economic forces. Innovations do not appear like manna from heaven. Innovations are
the result of sustained effort by individuals, either alone or as part of a laboratory or
firm, to create new products and better ways to produce existing products. When
innovators are allowed to retain rights to the output of innovative effort, they will
have the incentive to devote their creative resources to developing innovations. If
property rights to potential innovation do not reside with an innovator, the incentive
to devote resources to innovation is reduced, and society can expect fewer new
products and processes. Proper assignment of these property rights brings forth
innovations that provide increased productivity and, thus, economic growth and
development. Such property rights are referred to as intellectual property rights and
are typically embodied in laws regarding patents, copyrights, trademarks, trade
secrets and designs.
There is currently a debate in the international arena regarding the degree of
intellectual property protection countries should provide. One such dialogue is taking
place in the context of the negotiations to broaden the rules of the General Agreement
on Tariffs and Trade (GATT). The major issues for participants in the current
Uruguay Round of trade talks, which ends in December 1990, include eliminating
* President and Senior Consultant, respectively, of National Economic Research Associates, Inc. (NERA),
Washington, D.C., U.S.A. Research funding has been provided by the Pharmaceutical Manufacturers
Association. The assistance ofJonathan Falk, Yulia Privalova and Lori Nordgulen is gratefully acknowledged.
' A classic work is by S. Kuznets, Modern Economic Growth: Rate, Structure and Spread, Studies in Comparative
Economics, vol. 7 (New Haven: Yale University Press, 1966).
Copyright © 2007 by Kluwer Law International. All rights reserved.
No claim asserted to original government works.

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