Notes on patents, distortions, and development

The idea behind patent policies is to increase the output of commercially useful innovations by creating a transitory propertyy right that allows the inventor to appropriate part of the returns from his invention. In developing countries, two types of considerations need to be addressed. First, there are issues of designing an appropriate patent system. This includes considerations of administrative efficiency, the impact on government expenditures, and the legal administration of intellectual property rights. Second, and more fundamentally, the investments that patent incentives trigger in research and development are one of many uses for scarce savings. Returns to investmentsprotected by patents depend on the productivity of the inventive process and the industrial applicability of innovations. In situations where the innovative processes might be low, care should be taken that scarce investment resources are not wasted in unproductive research and development endeavors. The paper also argues that in unstable and protected economies, the social returns of patented innovations might be low. The analysis suggests a sequencing of policies where patent protecion should be strengthened once developing countries have achieved a level of savings compatible with investments in risky research and development projects, relative economic stability and competition through open market policies.Environmental Economics&Policies,Economic Theory&Research,Real&Intellectual Property Law,General Technology,Education for the Knowledge Economy

Patents and pharmaceutical drugs : understanding the pressures on developing countries

This paper offers a discussion to the question of why there are pressures on developing countries for introducing and/or reinforcing patent protection to pharmaceutical drugs. Patent protection is an important component of a complex strategy developed by the research and development intensive pharmaceutical drug companies of industrial countries to meet market competition. For legal and economic reasons, patents are fundamental instruments for allowing the drug-inventing companies to appropriate the returns from their inventions. Patents sustain high prices, which in turn provide rents to undertake further research and development, which in turn allows the invention of new drugs, etc. In recent years, increasing drug regulations have implied that effective patent protection to the research and development intensive pharmaceutical drug companies has eroded. Furthermore, competition from the generic drug companies has increased quite significantly. Restoring patent protection in industrial countries and making developing countries introduce patent protection, has become part of research and development intensive pharmaceutical companies'strategies to regain market share.Industrial Management,Environmental Economics&Policies,Pharmaceuticals&Pharmacoeconomics,Real&Intellectual Property Law,Water and Industry

The choice between unilateral and multilateral trade liberalization strategies

This paper develops a framework for analyzing the economic costs and benefits of unilateral and multilateral trade liberalization strategies. The interest in this topic is sparked by the apparent dilemma faced by some developing countries in the ongoing Uruguay Round of multilateral trade negotiations (MTNs). An active participation in the MTNs implies that what developing countries have to bargain away is worth something there. If so, it might pay to delay the introduction of unilateral measures in the hope of securing increased access to foreign markets. Deciding on the merits of unilateral and multilateral trade liberalization strategies should involve economic and political factors. This report addresses the economics of this decision and applies the framework to the case of Argentina.TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Economic Theory&Research,Trade Policy,Environmental Economics&Policies,Trade and Regional Integration

Unequal Exchange: Developing Countries in the International Trade Negotiations

The results of the Uruguay Round, show that the concessions given by developing countries were generally more valuable than those they received from industrial countries. I suggest that this outcome is explained by aggressive demands from industrial countries, and by the lack of resources at the disposal of developing countries. These and other “structural factors”, weaken the negotiating capacity of developing countries and the outcome of their bargaining, is likely to be an “unequal exchange of concessions”. The paper discussess the costs of these exchanges, and the structural factors that help to understand the processes leading to these outcomes.Uruguay Round, Multilateral Negotiations, Developing countries, Unbalanced reciprocity

The microeconomics of bullionism : arbitrage, smuggling and silver outflows in Spain in the early 18th century

In the Early Modern period, there was a systematic flow of precious metals from the American colonies to Spain and Portugal and, from there, throughout the world. In this paper, I use newly discovered data on the black market for silver in Cadiz to reconstruct a picture of Castilian smuggling and international silver flows in the Age of Bullionism (1729-1741). The arbitrage equation shows persistent violations of the silver-point that made arbitrage systematically profitable until devaluation pegged the exchange rate to the arbitrated parity. Market structure explains the persistent violations. The Cadiz shadow price was lower than the international market price because bullionist regulations configured an oligopsonistic structure. The price gap was the reason for the Castilian silver outflows to EuropeBullionism, Capital controls, Silver outflows, Silver-point mechanism, Smuggling, Oligopsony, Arbitrage

Unequal Exchange: Developing Countries in the International Trade Negotiations

The outcome of the Uruguay Round show that the concessions given by developing countries were more valuable than those they received from industrial countries. I suggest that this outcome is explained by the aggresive demands from industrial countries and the lack of resources (human and financial) at the disposal of developing countries. The paper discussess the costs of these unequal exchanges, and the structural factors that help to understand the processess leading to these outcomes.Uruguay Round, Developing countries, Reciprocity,

Is the EU's Foreign Policy Identity an Obstacle? The European Union, the Northern Dimension and the Union for the Mediterranean

The impact of the EU policies on its borderlands has been highly varied. We will argue that a valuable addendum on Rationalist explananda for such varied impact, can be found be exploring how the EU constructs its international identity vis-à-vis neighboring countries. We will use the Northern Dimension and the Union for the Mediterranean to verify how the EU identitarian projection creates contradictions and/or dissonance with neighboring countries to illustrate the uneven impact of EU policies.European foreign policy, Union for the Mediterranean, Northern Dimension, Baltic Sea, Identity

Argentina

After decades of being a marginal player in the GATT trade negotiations, Argentina decided to participate actively in the Uruguay Round. This chapter measures the imbalance between the concessions given and received and concludes that the value of the first are far more important than the second. I discusss the economic consequence of this imbalance, and the prospects that the outcome of the Doha Round can be more balanced outcome for Argentina.Argentina, GATT, Uruguay Round, Reciprocity, Intellectual Property

US contingent protection against honey imports : development aspects and the Doha Round

On December 10, 2001 the U.S. Department of Commerce (DOC) imposed steep antidumping duties against honey imports from Argentina and China ranging from 32.6 percent to 183.8 percent, and a countervailing duty against Argentina of 5.9 percent. A previous antidumping investigation in 1995 ended with a suspension"agreement"that curtailed U.S. imports from China by around 30 percent. Millions of beekeepers around the world, most of them poor, make a living from honey production, and a free and competitive world market would help raise their standards of living. Nevertheless, the sequential pattern of increasing and widening protectionism followed by the United States, the world's top importer, to include successful exporters under the effects of its contingent protection measures sends a clear message that other countries should think twice before investing in expanding honey exports to the United States. In addition to looking into the trade effects of these contingent protection measures, the author concludes that under the regulatory arrangements of the DOC, Argentina's beekeepers never had a chance of defending themselves. For example, responding to the DOC's lengthy and sophisticated questionnaires that sought to determine cost of production went beyond the capacities of poor beekeepers. In the absence of information, the DOC resorted to evidence presented by the petitioners which was riddled with errors. The available evidence suggests that had beekeepers been capable of responding to the questionnaires, the margin of dumping would had been lower, if at all existent. This and other evidence discussed by the author suggest the urgent need to introduce reforms into the World Trade Organization antidumping and subsidy agreements. At the minimum what is required is a consensus that all respondents be given the same opportunity by the international trade rules. The author argues that at present this is not the case and offers suggestions for reforms.Trade Policy,Environmental Economics&Policies,Labor Policies,Economic Theory&Research,Public Health Promotion,Environmental Economics&Policies,Economic Theory&Research,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Trade Policy,Rules of Origin