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IPR, Markets For Technology, and Developing Countries

IPR, Markets For Technology, and Developing Countries. Ashish Arora Carnegie Mellon University WIPO-WTO Joint Workshop 17 November 2003. Roadmap. Markets for technology Knowledge Economy – Knowledge as a tradable good

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IPR, Markets For Technology, and Developing Countries

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  1. IPR, Markets For Technology, and Developing Countries Ashish AroraCarnegie Mellon University WIPO-WTO Joint Workshop 17 November 2003

  2. Roadmap • Markets for technology • Knowledge Economy – Knowledge as a tradable good • Impact of MFT for developing countries: Evidence from the chemical industry • Upstream, specialist technology suppliers • Role of IPR in MFT • Direct impact via efficiency of licensing transactions • Supply of know-how and tacit knowledge in licensing transactions • Indirect impact via entry of specialist suppliers • Whose IPR regime? Arora, "IPRs, MFT & DC"

  3. Markets for Technology: A Simple Typology Existing Future Technology Technology or component Union Carbide licensing polyeth. technology to BP Sun licensing Java to Horizontal (with IBM; R&D joint ventures actual or between rivals potential rivals) Licensing of IP Affymax licensing combinatorial technology to Pharmaceutical firms Vertical cores in (Licensing to semiconductors non riv als) Arora, "IPRs, MFT & DC"

  4. Markets for Technology • Increasing licensing and tech trades in 1990s • Active or emerging tech markets in • Chemical processes • Biotechnology • Semiconductors • Estimated size of market for technology • $50 billion per year (royalty flows) • $20-35 billion per year (licensing plus R&D) • 10-15% of civilian R&D Arora, "IPRs, MFT & DC"

  5. MFT have facilitated the diffusion of chemical technology to developing countriesShare in world exports of chemicals, 1899-1993, by country of origin Source: Table 2 in Eichengreen, in Arora, Landau, and Rosenberg (eds), 1998

  6. Developing Countries and Small Firms Benefit the Most from a MFTBuyers of chemical process technologies, by source of technology, 1980-90 Source: Arora and Fosfuri, 1998

  7. Impact of an additional SEF: Estimated additional investment per process, $ mill., 1981-90 For developing countries as a whole, in a typical market, an additional SEF implies ~ 1 additional plant. (Arora, Fosfuri and Gambardella, 2000)

  8. Direct: Can mitigate a key problem – transferring tacit knowledge Arora, 1995 & 1996 Patents can be held as “credible hostages” in technology transactions when non-protected, complementary know-how and services have to be provided. Technical services more likely to be included in licensing contracts when bundled with patents and as part of “turn-key” arrangements. Direct: Incentives for codification Easier to search Cheaper to transfer Indirect (but possibly most important): MFT Encourage upstream technology specialists Biotech (Arora and Merges) Semiconductors (Hall and Ziedonis) Chemicals Patents and Markets for Technology Arora, "IPRs, MFT & DC"

  9. Developing country IPR enhance technology licensing, know-how transfer Increase tech holder bargaining power; may raise cost of technology Modest impact on innovation by developing country  mostly for innovations specific to developing countries Modest impact on market for technology Developed country IPR Enhance incentives to codify Facilitate market for technology Encourage technology specialists (SEFs) Encourage licensing by incumbent producers which spills over Enhance innovation by developing countries for developed markets Whose IPR Regime Matters for What? Arora, "IPRs, MFT & DC"

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