Mowing the Playing Field: Addressing Information Distortion and Asymmetry in the Trips Game
Paul J. Heald
University of Illinois College of Law
Vanderbilt Law and Economics Research Paper No. 02-21; Vanderbilt Public Law Research Paper No. 02-15
Induced by favorable trade concessions, developing countries seem to be willing to incur some of the costs of enacting and enforcing the new laws necessary to comply with the TRIPS Agreement. The United States and other industrialized nations insist compliance is a small sacrifice. They assert that enforcement of high intellectual property standards imposes only short-term costs and that long-term stimulus of local creativity and direct foreign investment offer the best incentive for developing countries to embrace the TRIPS Agreement. This paper de-mystifies the canonical work inevitably cited for the proposition that a developing country will stimulate foreign direct investment by increasing its intellectual property protection. It's difficult to overestimate the influence of Edwin Mansfield's 1994 paper for the International Finance Corporation, but close scrutiny reveals that its findings have been consistently misread. The developing world should be very skeptical of the Western claim that maximum enforcement of intellectual property laws will inevitably lead to economic prosperity. In the world of intellectual property law, one size does not fit all. Each country must consider it's own unique economic situation in crafting an intellectual property policy that complies with the TRIPS Agreement. The paper examines options available to policymakers most likely to be involved in the compliance process in developing countries. First it looks through the legislative lens and explores the numerous statutory options available to capture welfare benefits offered by intellectual property while reducing the cost to consumers and local industry of complying with the TRIPS Agreement. Next, proposes a role for the judiciary in realizing legislative initiatives. Then, it focuses on the welfare-enhancing ways that intellectual property owners and users can be permissibly regulated by an executive (or agency) function. Finally, it explores the critical diplomatic perspective, and borrowing from the work of Professors Reichman and Lange, suggests strategic initiatives that can enable a nation to "bargain around the TRIPS Agreement." Even if new intellectual property laws do not stimulate investment in - or technology transfer to - a developing country, public/private partnerships have the potential to leverage significant economic benefits. One advantage of examining the TRIPS Agreement from distinct legislative, judicial, executive (or agency), and diplomatic perspectives is what it can reveal about ineffective or non-existent governmental structures in the developing world. The approach taken here not only directly examines the substance of rational intellectual property policy, but also indirectly addresses the structure of effective lawmaking and enforcement.
Number of Pages in PDF File: 100
JEL Classification: F0, K0, K1
Date posted: August 9, 2002