2. Intellectual Property and Development
2.1 Arguments on Intellectual Property and Economic Development
The preceding introduction stresses the argument that IP policies should be adopted as development policy by developing countries, such as Thailand. This argument refers to the contribution of IP protection to development. Particularly, the IP policies that can be incorporated as integral part of national economic development strategies are often referred to as a study of the effect of IP protection on economic development.16 It is a relatively new field of study, which has been studied widely by several leading scholars, to support IP protection, consistent with the interest of developing countries.17 They argue that countries that implement sufficient IP protection can benefit from increased R&D and local innovation, trade flows in goods, movement of higher technology, foreign direct investment, and thereby enhancing economic growth and development.18 It is interesting to note that the idea to use IP policies for development has been developed under the influence of the “utilitarian theory” school of thought, which was advocated by Jeremy Bentham and John Stuart Mill.19 In fact, the utilization of IP for development strategy has historically been adopted by developed nations in the past,20 and more recently by East Asian countries, such as South Korea, Taiwan, Singapore, Hong Kong, and more recently China with significant success.
The economic effect of IP on development has been controversial. The opponents of the IP position argue that there is no evidence that the protection of IP would contribute towards the development. They point out that the growth of development does not seem to be correlated to the protection of IP, just as argued by various economists.21 Rather, the imposition of IP regime may harm development prospect of developing countries by raising the costs of imitation and permitting monopolistic behavior by IP holders.22 This conventional view suggests that the imposition of IP regime would not be economically efficient, and thus in itself is insufficient to achieve development objectives.23
Nonetheless, the empirical evidences typically found in the process of development do not seem to support those arguments. In the process of development, IP has been one of the most indispensable elements in the success, which has been employed by what used to be developing countries in East Asia, such as South Korea with significant success. To illustrate this point, the development process of the East Asian countries needs to be examined. It is important to note here that there are several case historical case studies not only from the experience of the East Asian countries, but also the experience of the developed countries in the 19th century, and other emerging economies in the last decades. However, this article specifically focuses on the lessons of South Korea in order to illustrate the outward development cases that incorporated IP considerations into the national development strategy as follow.
2.2 A Case Study of South Korea’s IP Policies for Development
It is well known that South Korea was one of the poorest nations in the world, lacking both natural and technological resources.24 To develop its economy, the government of South Korea adopted a set of aggressive development strategies.25 These strategies are often called “export-oriented development policies,” which were supplemented by various IP policies.26 Specifically, these IP strategies included the two following components:
- The government’s support for domestic inventors and innovators by using “a utility model law,” which was similar to small patent, to protect the improvements made by domestic inventors and enterprises to the imported technologies. As a result, a local technological expertise and skills based was firmly established and developed.27
- The government’s support for R&D in specific industries and firms. Such R&D support has led to the development of technology-based productions, and has contributed to increased exports of a number of advanced technology-based electronic products since then.28
As a result of this state of affair, the resources acquired through international trade, which was encouraged by its success in IP protection, have enabled South Korea to promote its domestic industries and achieve rapid economic growth and development. These economic development policies, which were supplemented by IP policies, established South Korea as one of the world’s leading industrial nations with higher standards of living. Such success can be attributed to the role of IP in various policies into national development strategies.29
Although the development success may be attributed to several factors other than the contribution of IP, few would dispute the importance of IP in the development process of South Korea. In this development model, IP become the engine for development by building a foundation for domestic industries as well as creating demands for exports, foreign direct investment and the movement of technology transfers. This is the common element observed in the development process of Japan,30 other East Asian countries, such as China,31 and other newly industrializing countries (‘NICs’) in Asia.32 In those Asian countries, they all have achieve rapid economic growth and development through effective IP policies, and this development strategy is an effective development model that can be learnt and adopted by Thailand and other developing nations.
16. The study of IP on development is a relatively new field of study. Two notable institutional efforts include the World Bank’s report on the impact of IP on economic development, and a report published by the UK Commission on Intellectual Property Rights.
17. Modern scholarship on the relationship between IP and development has generated a number of models and has subjected them to extensive empirical testing, often using data regarding the impact of introducing patents protection on economic development. No one theory, however, has been conclusively established.
18. A large body of literature discusses the positive impact of IP on economic development including:
Jeremy Bentham and John Stuart Mill were regarded as father of the utilitarian theory school of thought.
20. A report published by the UK Commission on Intellectual Property Rights is one of the two notable institutional works on the impact of IP on economic development. See,Commission on Intellectual Property Rights, Integrating Intellectual Property Rights and Development Policy (Commission on Intellectual Property Rights, London: 2002) (‘UK Commission on Intellectual Property Rights’).
Keith E. Maskus, ‘The Role of Intellectual Property Rights in Encouraging Foreign Direct Investment and Technology Transfer in Intellectual Property and Development’ (1998) 9(1) Duke J. Comp. & Int’l Law
, 109–161; David Levine and Michele Boldrin, Against Intellectual Monopoly
(New York: Cambridge University Press, 2007); Peter K. Yu et al
, ‘China and the WTO: Progress, Perils, and Prospects’ (2003) 17(1) Colum. J. Asian L.
, 1–30; Mikhaelle Schiappacasse, ‘Intellectual Property Rights in China: Technology Transfer and Economic Development’ (2004) 2(2) Buff. Intell. Prop. L.J.
, 164–185; Yahong Li, ‘Pushing For Greater Protection: The Trend toward Greater Protection of Intellectual Property in the Chinese Software Industry and the Implications for Role of Law in China’ (2002) 23(4) U. Pa. J. Int’l Econ. L.
22. Levine, D, and Boldrin, M, above 22; Maskus, K, above n 22; Keith E. Maskus, ‘Intellectual Property Rights and Economic Development’ presented at A Symposium on Compliance with International Intellectual Property Law, Fredrick K. Cox International Law Center at Case Western Reserve University, February 6, 2000 (providing an analytical overview of how economic development may be hindered by an effective system of IPRs); and Rajnish Kumar Rai, ‘Effect of the TRIPS-Mandated Intellectual Property Rights on Foreign Direct Investment in Developing Countries: A Case Study of the Indian Pharmaceutical Industry’ (2009) 11(5) J. World Intellectual Property, 404–431 (citing empirical evidence regarding the protection of IPRs that has negative impact on foreign direct investment in pharmaceutical industries in India).
Ha-Joon Chang, Kicking Away the Ladder: Development Strategy in Historical Perspective
(London: Anthem Press, 2002) at 83–85.
24. Yong-Shik Lee, Reclaiming Development in the World Trading System (New York: Cambridge University Press, 2007) (highlighting the case study of South Korea’s successful export promotion development strategy).
Ibid, chapter 1, at 15 – 18.
26. For a brief discussion on South Korea’s economic development and the utilization of IP law see, Jai S. Mah, and Jae-hee Kang, ‘Export Promotion Policies in Economic Development: Korea’s Experience’ in Yong-Shik Lee (ed), Economic Development through World Trade: A Developing World Perspective (The Netherlands: Kluwer Law International Law, 2008) 173–189.
Kamil Idris and Hisamitsu Arai, The Intellectual Property-Conscious Nation: Mapping the Path from Developing to Developed
(WIPO Publication, No.988)) can be accessed at <http://www.wipo.int/ export/sites/www/about-wipo/en/dgo/wipo_pub_988/pdf/wipo_pub_988.pdf>.
28. Mah, J.S., and Kang, J.H., above n 26, at 178; K. Kim, In Search of Best Practices of Successful R&D Management Activities in Korea (Seoul: Science and Technology Policy Institute, 1997). The R&D promotion policy of the government was especially critical in the development of the mobile industry of Korea.
Idris, K, and Arai, H. above n 27, at 32–33; Mah, J.S., and Kang, J.H. above n 26, at 178.
30. See UK Commission on Intellectual Property Rights, above n 20, at 18–20.
For discussion on China’s intellectual property protection and economic development see, Idris, K, and Arai, H, above n 27, at 33–35; Joseph Straus, ‘Bargaining Around the TRIPS Agreement: The Case for Ongoing Public-Private Initiatives to Facilitate Worldwide Intellectual Property Transactions’ (1998) 9 Duke. J. Comp. & Int’l Law
, 91–107. Another significant example of East Asian country that incorporate IP policy into their national development strategy is Singapore see, Robin Ramcharan, ‘Singapore’s Emerging Knowledge Economy: Role of Intellectual Property and Its Possible Implications for Singapore Society’ (2006) 9(3) J. World Intell. Prop.
32. The current NICs, such as Malaysia is currently in the process of reforming its IP policies to promote economic development see, Lim Heng Gee, Ida Madieha Azmi, and Rokiah Alavi, ‘Reforms Towards Intellectual Property-Based Economic Development in Malaysia’ (2009) 12(4) J. World Intell. Prop., 317–337