Intellectual Property Intellectual Property Rights and Technology Rights and Technology

TransferTransfer

Keith E. MaskusKeith E. Maskus

WIPO-WTO Joint WorkshopWIPO-WTO Joint Workshop

17 November 200317 November 2003

International Technology International Technology TransferTransfer

ConceptsConcepts What is ITT?What is ITT? What are its components?What are its components?

Market-mediated means of ITTMarket-mediated means of ITT Trade in goods and servicesTrade in goods and services Foreign direct investmentForeign direct investment Technology licensingTechnology licensing Joint venturesJoint ventures

International Technology International Technology TransferTransfer

Non-market channels of ITTNon-market channels of ITT Imitation and reverse engineeringImitation and reverse engineering Labor turnoverLabor turnover Temporary migration of scientific and Temporary migration of scientific and

technical personneltechnical personnel Reading patent applicationsReading patent applications

ITT and SpilloversITT and Spillovers

Measuring spillover impactsMeasuring spillover impacts Positive evidence from imports and Positive evidence from imports and

exportsexports Mixed evidence from horizontal FDIMixed evidence from horizontal FDI Strong evidence of backward linkagesStrong evidence of backward linkages Few studies of spillovers from licensingFew studies of spillovers from licensing Issues regarding public domain ITTIssues regarding public domain ITT

Essential Determinants of Essential Determinants of Inward FDIInward FDI

Market size and growthMarket size and growth Proximity to other marketsProximity to other markets Human capital base and skillsHuman capital base and skills Domestic R&D capacityDomestic R&D capacity Good governance and transparencyGood governance and transparency Trade costs and investment costsTrade costs and investment costs Effective infrastructureEffective infrastructure

The Role of IPRsThe Role of IPRs

Problems with technology marketsProblems with technology markets Ability to appropriate returns to Ability to appropriate returns to

investmentinvestment Information problemsInformation problems Market powerMarket power Public goods questionsPublic goods questions

The Role of IPRsThe Role of IPRs

Basic objectives of balanced IP protectionBasic objectives of balanced IP protection Promote innovation through exclusive rightsPromote innovation through exclusive rights Public disclosure to expand knowledge stockPublic disclosure to expand knowledge stock Support for markets in technology, including Support for markets in technology, including

ITTITT Support diffusion and incremental innovationSupport diffusion and incremental innovation

Can trade secrets contribute?Can trade secrets contribute? But IPRs raise their own problemsBut IPRs raise their own problems

Summary of Empirical Summary of Empirical ResearchResearch

Patent applications are an important Patent applications are an important conduit for learning among OECD conduit for learning among OECD

Patent rights may be expected to Patent rights may be expected to raise rents earned by inventorsraise rents earned by inventors

A comment on the nature of A comment on the nature of empirical work in this areaempirical work in this area

Trade flows respond to patents Trade flows respond to patents among developing countriesamong developing countries

Summary of Empirical Summary of Empirical ResearchResearch

Evidence on patents and FDI is mixed Evidence on patents and FDI is mixed and there may be threshold effectsand there may be threshold effects

Licensing seems to respond positively Licensing seems to respond positively to patents and there is an to patents and there is an “externalization effect”“externalization effect”

Sophistication of technologies Sophistication of technologies transferred rises with IP protectiontransferred rises with IP protection

Not enough evidence on poorest Not enough evidence on poorest countriescountries

National Historical National Historical ExperienceExperience

Japanese history suggests importance of Japanese history suggests importance of well-chosen IP standards and promotion of well-chosen IP standards and promotion of innovation and diffusioninnovation and diffusion

Korean history indicates trajectory from Korean history indicates trajectory from imitating mature technologies to imitating mature technologies to knowledge-driven innovationknowledge-driven innovation

Access to mature, stable technologies is Access to mature, stable technologies is important for poor countriesimportant for poor countries

Impact of TRIPS?Impact of TRIPS?

Host-Country Policy Host-Country Policy SuggestionsSuggestions

Remove barriers to entry in innovationRemove barriers to entry in innovation Adequate supply of engineering and Adequate supply of engineering and

management skillsmanagement skills Ensure competition in supplier industries for Ensure competition in supplier industries for

backward linkagesbackward linkages Promote adequate business environmentPromote adequate business environment Reduce “technological distance”Reduce “technological distance” IP standards to promote dynamic IP standards to promote dynamic

competitioncompetition

A Comment on Article 66.2A Comment on Article 66.2

Difficulty of forcing technology Difficulty of forcing technology transfertransfer

Scope for expanding 66.2Scope for expanding 66.2 WTO can play a role in collaboration WTO can play a role in collaboration

and sharing informationand sharing information WTO can monitor and evaluate WTO can monitor and evaluate

programsprograms Broader thinking neededBroader thinking needed

ConclusionConclusion

Importance of ITTImportance of ITT Focus on reducing market Focus on reducing market

imperfections and expanding imperfections and expanding receptivity of host countriesreceptivity of host countries

IPRs can play a positive roleIPRs can play a positive role