Policy Space in Intellectual Property Rights and Technology Transfer: A New Economic Research Agenda

My purpose in writing this chapter is to pose a number of questions that have not been satisfactorily addressed, if at all, by economists working in the area of intellectual property rights (IPRs), trade, foreign direct investment, and technology diffusion. There is always a basic tradeoff between fundamental gains and losses from protecting IPRs, or rather reforming them in a manner that offers more certainty and exclusivity to rights holders. On the one hand, such reforms may be expected to improve the functioning of formal markets in which technologies are traded across borders, at least in recipient emerging countries with supportive economic and policy frameworks. On the other hand, those reforms raise the costs of technology imitation by local firms and impose administrative burdens on domestic authorities. They may also limit the policy flexibility those authorities have to regulate the use of exclusive rights and encourage broad adoption and diffusion of incoming technical knowledge. In this chapter I offer some thoughts on these questions, with a particular emphasis on policy issues surrounding international technology transfer and IPRs. In the second section I discuss available evidence on how patent reforms seem to affect flows of technology through formal markets. Following that is a review of various policy flexibilities that matter in this context, considering the limited evidence about how well they work. In the last substantive section I address some of the broader policy questions that affect technology diffusion, most of which have not been studied systematically by empirical economists. In that context, the section sets out an agenda for economic research that would focus on understanding how broader policies and conditions could improve access to global technologies, even in the presence of IPRs reforms. That analysis is partly speculative, attempting to envision how to peel back the veil of ignorance covering key issues in this area of inquiry.