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Notes on patents, distortions, and development

Listed author(s):
  • Nogues,Julio

The idea behind patent policies is to increase the output of commercially useful innovations by creating a transitory propertyy right that allows the inventor to appropriate part of the returns from his invention. In developing countries, two types of considerations need to be addressed. First, there are issues of designing an appropriate patent system. This includes considerations of administrative efficiency, the impact on government expenditures, and the legal administration of intellectual property rights. Second, and more fundamentally, the investments that patent incentives trigger in research and development are one of many uses for scarce savings. Returns to investments protected by patents depend on the productivity of the inventive process and the industrial applicability of innovations. In situations where the innovative processes might be low, care should be taken that scarce investment resources are not wasted in unproductive research and development endeavors. The paper also argues that in unstable and protected economies, the social returns of patented innovations might be low. The analysis suggests a sequencing of policies where patent protecion should be strengthened once developing countries have achieved a level of savings compatible with investments in risky research and development projects, relative economic stability and competition through open market policies.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 315.

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Date of creation: 31 Jan 1990
Handle: RePEc:wbk:wbrwps:315
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  1. Zvi Griliches, 1989. "Patents: Recent Trends and Puzzles," NBER Working Papers 2922, National Bureau of Economic Research, Inc.
  2. Rafiquzzaman, M., 1987. "The optimal patent term under uncertainty," International Journal of Industrial Organization, Elsevier, vol. 5(2), pages 233-246.
  3. R. E. Evenson & Jonathan D. Putnam, 1987. "Institutional Change in Intellectual Property Rights," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 69(2), pages 403-409.
  4. Robert P. Benko, 1988. "Intellectual Property Rights and the Uruguay Round," The World Economy, Wiley Blackwell, vol. 11(2), pages 217-232, June.
  5. Scherer, F M, 1972. "Nordhaus' Theory of Optimal Patent Life: A Geometric Reinterpretation," American Economic Review, American Economic Association, vol. 62(3), pages 422-427, June.
  6. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1987. "Appropriating the Returns from Industrial Research and Development," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(3), pages 783-832.
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