Feb 04, 2015 - 3:15pm

4 Charts Show that Stronger Intellectual Property Protections Mean a Stronger, More Innovative Economy


Senior Editor, Digital Content

bloomberg_india_drug_maker_800px.jpg

A worker inspects tablets moving along the production line in a pharmaceutical plant in India.
A worker inspects tablets moving along the production line in a pharmaceutical plant in India. Photo credit: Dhiraj Singh/Bloomberg.

It appears that countries are taking intellectual property protection more seriously.

The Global Intellectual Property Center released its International IP Index (GIPC Index), scoring the IP environments of 30 countries that make up 80% of global GDP.

The United States leads in IP protection followed by the United Kingdom, Germany, France, and Singapore. More interesting than the rankings themselves, the report finds:

What is perhaps most striking about the results of the third edition is the degree to which the protection of IP and enforcement of IP rights has improved—or at least not weakened.

Countries are started to realize that protecting IP means stronger economies. According to the report, research has found “a robust relationship between strengthening levels of IP protection and an increase in different economic benefits such as foreign direct investment (FDI), technology transfer, job creation, and economic development.”

It explains:

While IP rights are just one factor of several (and the results may vary by stage of development, level of income, and other factors), economies that make improvements to their IP environments also tend to experience quantifiable economics benefits.

These four charts show that stronger IP protection can mean a stronger, more innovative economy.

1. Companies in economies with advanced IP systems are 40% more likely to invest in research and development.

2. Countries with stronger IP protections have higher percentages of workers in knowledge-intensive sectors.

3. Using the life sciences sector as an example, economies with beneficial IP protections see 9–10 times more investment than economies with weak IP protections.

4. Countries with stronger IP protection produce 50% more innovative output than countries with weaker IP protection.

While the report finds that from a global perspective IP protections haven’t weakened, there’s plenty of room for improvement. Take India for example:

Although the IP environment in India has improved slightly, several opportunities exist for the Modi administration to make further enhancements, particularly by amending patentability requirements, renouncing the use of compulsory licenses as a commercial tool, and strengthening the copyright framework to address online and physical piracy.

And the United States’ top trading partner, Canada:

Canadian courts continue to apply a heightened standard for patent utility that imposes an arbitrary patentability test on inventions. The unique patent utility test raises uncertainty about how much information needs to be disclosed in patent applications, and represents a significant erosion of patent rights.

Even the United States can improve:

Although the United States has introduced several successful initiatives to shut down rogue websites—such as the “In Our Sites” operation—for a top-tier economy, it scores poorly in the enforcement indicators due to ineffective border measures to seize counterfeit goods.

Intuitively we understand that strong IP protections stimulate innovation and investment. This report shows how strong IP protections support stronger economies.

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About the Author

About the Author

Sean Hackbarth
Senior Editor, Digital Content

Sean writes about public policies affecting businesses including energy, health care, and regulations. When not battling those making it harder for free enterprise to succeed, he raves about all things Wisconsin (his home state) and religiously follows the Green Bay Packers.