Intellectual property plays a significant role in innovation and impacts economic growth at large. Today, we can see patent protected inventions in almost all the fields, especially those associated with technology. The role of intellectual property has evolved tremendously; it now impacts innovation, trade, taxes and competitiveness. Intellectual property is universal. The economy today promotes the generation and management of knowledge due to its role in wealth creation.

Intellectual property constitutes a major value component in many trade transactions. Global trade flows are driven by knowledge-intensive goods and services, which are rapidly penetrating the market due to transparency and authenticity. Although it is evident that most developed countries dominate knowledge-intensive flows, the same associated with developing countries like China are not less. China’s knowledge-intensive flows are considered the world’s second-largest in share. 

Intellectual Property Reinforces Innovation and Growth

A well-planned, well-managed, and executed intellectual property rights boost innovative applications and increase the chances of return on investment to innovators. In a nutshell, IP rights is an organized way of capitalization investment in knowledge creation. The implementation of intellectual property rights doesn’t benefit the innovators alone but the companies and helping them give the trust on investing further in research and development. That calls for numerous benefits of IP rights, some of which include the following:

  • Domestic innovations get backed-up with powerful incentives
  • Knowledge spillovers help others to innovate
  • Allowing the innovative companies to offer dedicated support in the innovative invention without wasting their time and resources to protect their IP in an otherwise risky environment
  • Promoting the international dispersal of innovative technology and its use
  • Exposing a country to a better level of R&D activities, enhance inbound foreign direct investment (FDI), and exports of goods and services

IPRs Strengthen Economic Growth

A strong correlation between IPR and technology transfer has been mentioned many times via different academic research. IPR strengthening in countries is directly associated with augmented technology transfer via trade and investment.

IPRs Strengthen Innovation

Intellectual property rights boost innovation. The IPR reforms introduce a robust incentive system for domestic innovations. Furthermore, the trade in technology where imports, Foreign Direct Investment (FDI) and technology licensing atop the business and trade, IPR capitalizes on innovator’s ideas and efficiency. The legal assurance on the protection of patents and trade secrets allows firms the confidence to reveal proprietary characteristics of technologies to subsidiaries and licensees via contracts.

IPRs Strengthen Exports

Stronger patent rights are directly associated with faster growth in the IP-intensive sector, be it pharmaceuticals or biotechnological inventions. Countries are more likely to trade with companies dealing with patented technologies to protect consumers’ interests.

Countries That Do Not Enact IPR Protections and Enforcement, Developments Take a Back Seat in the Long Run

Not enacting IP rights can lead to a negative impact on the economic development of a country. Here’s how:

  • Inaccessibility to future innovations
  • Trade and foreign direct investment are compromised, which affects their consumers and their ability further in access to better technology vital to boost domestic productivity
  • Resources engaged more in protection rather than invention in the absence of a robust IP protection enactment

China is a big example of this reference. Due to the absence of effective protection for IP rights in China, the country has a limited introduction of technology and innovation investments by foreign companies; this limits the reach of potential benefits for the local innovation capacity. However, the nation has excelled in bettering policies under the intellectual rights, yet uncertainty remains that prevents foreign and domestic firms from engaging in R&D activities.

Implications for National and Global Innovation

With innovation being the foremost pillar for growth and sustainability of inventive technologies; countries worldwide are obligated to have an essential framework for global trade and innovation that should extend beyond IPRs to facilitate even the technological commercialization, scientific research, taxes, government procurement, trade, investments in information and communications technology, training and development, and regulatory policies.

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