Dramatic growth in the economic importance of intellectual property (IP) assets is driving policy initiatives in developing countries that are enabling them to realise the value of their own innovations. That is the conclusion of the debut World IP Report from the World Intellectual Property Organisation (WIPO) published on 14 November.
According to the report, catch-up growth – and more generally the spread of technology between countries – is happening faster than ever before. This has been exemplified in particular by South Korea and China: countries that have demonstrated a readiness to adopt the technologies and production techniques of countries with higher levels of technological development. Factoring in latest available data from high and low-income countries alike, the report reveals that:
• International revenue from royalties and licensing fees increased from $2.8bn in 1970 to $27bn in 1990 – then to around $180bn in 2009, outpacing growth in global gross domestic product (GDP).
• About $1.2 trillion was spent on global research and development (R&D) in 2009. This is roughly double the sum spent in 1993, which was recorded as $623bn. However, worldwide R&D spending is skewed towards high-income, developed countries, such as the US, UK, Germany and France, which still account for around 70% of the world total.
• Nonetheless, developing economies increased their share of global R&D expenditure by 13% between 1993 and 2009. China accounts for most of this increase – more than 10% – propelling it to the position of second-largest R&D spender in the world during 2009.
IP’s transformational influence on developing economies, WIPO notes, is playing out in two key ways. Firstly, for countries in the earliest stages of development, ‘technology transfer from foreign, high-income economies and the spillover effects from foreign investment’ have proven to be the most important source of innovation, as they compensate for local shortfalls in capital and skills to conduct cutting-edge research. Secondly, local innovation – which is typically incremental in nature, building upon existing products and processes – is having a greater impact in developing economies. Furthermore, innovation performance in those countries has been enhanced by government-led policies to build up national knowledge bases. In the main, those policies are typified by i) investment in education, and ii) the crucial introduction of new machinery and equipment.
The reverse side of the global innovation boom, says the report, is that many patent offices have seen growing backlogs of pending applications. In 2010, the number of unprocessed applications worldwide stood at almost 5.2m. While this has been a source of frustration for innovators in developing countries, it has sometimes worked to the advantage of global corporations, who have been presented with enforced strategy periods – enabling them to conduct further product testing and market research, and buying them time to decide whether or not to drop specific applications.
WIPO director Francis Gurry hailed the growing strength of the IP landscape over the past four decades, and its contribution to development. ‘Innovation-driven growth is no longer the prerogative of high-income countries alone,’ he said. ‘The technological gap between richer and poorer countries is narrowing.’
To download a PDF of the full report, click here
Organisation’s first World IP Report takes 40-year, panoramic view of an IP economy that is outpacing global GDP and driving change in poorer countries