Intellectual Property And The Dilemma Of Developed Nations


Introduction

Control over the dissemination of knowledge in the form of intellectual property has emerged as a major issue in the current trade dispute between the United States and China. While many analysts may disagree with Trump’s approach on dealing with China, the majority of the experts are likely to agree that the Chinese government and corporations are, through unfair means, obtaining American intellectual property rights.

This accusation is denied by much of the Chinese media, which are more likely to attribute the recent upsurge in Chinese scientific and technological advancements to a superior education system and heavy government investment in innovation. While the great powers are trading blows over whether China stole Western intellectual knowledge, the underlying assumption behind these arguments is that intellectual property, ultimately, is justified and is something that should be protected. However, what these arguments do not say is that when it comes to developing countries, rigid enforcement of intellectual property laws, as envisioned in the Western countries, is often detrimental development and lead to prolonged impoverishment among the citizens of the developing world.

Unfortunately, discussions on the ethics of technology transfer and intellectual property rules, and the role they play in global development are drowned out by the mutual accusations of foul play among the world’s largest economies.

Mechanism

Intellectual property has often been justified by arguing that providing legal protection to inventors stimulates innovation, which allows for a faster pace of economic growth and improvements to living standards. Legal protection is needed for new inventions because theoretically research costs of a new invention often far exceed the production cost. Without legal protection that grants the inventor a virtual monopoly on the distribution of the product for a time, there would be little incentive for people or companies to invent new technologies and commercialize them, and as a result, the pace of innovation would slow down.

Even if people do invent new technologies or create new pieces of art, without legal protection, the creators would do their best to hide the methods of making the new products, which is arguably a much more inefficient method of trying to benefit from their invention. By securing profits for a new innovation and giving confidence to inventors to disclose trade secrets which others can benefit at a later date, it is argued that copyright protection facilitate knowledge diffusion and invention that in the long run benefit all people of the world.

The current problem, however, stems from the political ramification of this belief on how innovation occurs, and the ethics surrounding compensating inventors. The current system of patents and copyrights creates costly barriers for developing countries to obtain the knowledge and technology for them to catch-up to advanced economies. The barrier can prevent everything from obtaining basic necessities to the crucial technologies that facilitate to industrialization.

The most remembered battle between a national government and patent holders was South Africa’s battle against Western pharmaceutical companies regarding whether it was permissible for developing countries to circumvent the patent system in order to obtain lifesaving HIV drugs. Although South Africa won the argument, subsequent developments such as the Trade-Related Agreement on Intellectual Property Rights (TRIPS) imposed a Western-based intellectual property protection system onto the WTO.

More broadly regarding development, some economists and historians argue that unlicensed copying was almost always essential to industrialization for all countries that were not Great Britain. Whether it was France, Germany, United States, or Japan, all late-comers to the Industrial and Scientific revolutions were helped in some way by their countries’ non-compliance with the patent system that Great Britain had tried to impose on them. The businessmen and artisans in these countries copied British inventions, studied its scientific output, and produced knock-offs without paying for the cost of research, resulting in rapid industrial development. Today, this process is continuing as large developing countries such as the BRICS now battle established industrial economies over access to the accumulated technological and scientific knowledge.

The World Today

The old adage that “knowledge is power” is increasingly applicable to the current intellectual property global controversy. As China’s economy becomes increasingly advanced, allegations of corporate espionage attributed to the Chinese government and accusations of unfair policies that strong-armed foreign investors into giving up their trade secrets have become increasingly common. With the Chinese government aiming to transform China into a global scientific and technological power, access to available scientific knowledge and technological know-how is even more crucial to developing countries.

Unlike South Africa demanding access to generic drugs, the new rising economies now desire their companies to establish their own industrial bases to innovate and compete with established economies over the pieces of the high-tech pie rather than merely producing cheap versions of established products. This is a much more fundamental challenge to the current global order rather than merely haggling over compensating investors, as it concerns the power and influence of industrialized economies over the developing world.

Technological diffusion is likely to be detrimental to those living in the established economies, but for humanity as a whole, it would be beneficial. As economists always like to point out, competition breeds more innovation that leads to lower prices and broader access to what were previously luxury goods. Monopolies and oligopolies, on the other hand, prefer the status quo. Although employees in a monopoly firm might be better off than if their firm is forced to operate in a competitive environment, the vast majority of consumers would benefit from the destruction of the monopoly held by a firm.

This dynamic is now being played out by on a global scale, as the industrialized countries confront the developing world. The selfish thing to do, as people and empires throughout history have tried, is to keep everyone else down and maintain the status quo for as long as possible. To all but the most cynical people today, however, this attitude is no longer morally acceptable. It means deliberately keeping the vast majority of the world’s population in a state of poverty so a relatively few can live materially comfortable lives. Morally and economically, therefore, technological diffusion should be something that is welcomed or at least accepted.

There is also a social argument to be made about a more egalitarian global economic order. Many political scientists, economists, and sociologists have long argued that a world where prosperity is shared more equally is a safer world. Conflict and violence are often correlated with poverty, whether it is within a city or between countries. The poor of the developing world can certainly see the prosperity of the industrialized countries, and they will want to partake in that prosperity whether through immigration for through armed conflict. People that cannot partake in prosperity can still certainly see how the wealthy flaunt their wealth, leading to resentment and conflict. An equal distribution of the global productive resources and better integration of the developing world into the global economy can diminish the incentive for such conflicts, giving peace a better chance in some of the most troubled regions of the world.

Admittedly, the transition from a North Atlantic and North Pacific-centered world order to include ore of the Global South will not comfortable for the citizens in these developed countries. Already, it is accompanied by charged cries of “theft” and “unfair”, or smear campaigns painting the developing world as parasites leeching off of the pioneering greatness of the developed world. But historically all technologies that have proven to be useful have diffused to new groups. Established entities, whether state or corporates, have to adapt institutionally and culturally to be more effective in order to survive rather than relying on secrecy. Instead of launching trade wars and trading harsh languages with each other, the leaders of the global economy are better served to lay out new sets of rules governing what is likely a more multipolar world that puts the welfare of people above the interests of the few, rather than pointing fingers over who invented what.

Hanyu Huang