Economic Development and Intellectual Property

Chinese Solar Panel Production

Solar Panel Production: One of the areas China has been accused of engaging in development-through-copying.

Development has long been an elusive challenge. Despite more than sixty years of theorizing, debating, modeling, and discussing, I think a compelling case can be made that we really still don’t understand how and why development takes place. Sure, we understand the basics: corruption is generally bad, loans and foreign investment are insufficient, and so on. But there’s much, much more that we don’t really understand: How are democracy and development related? Is there a resource curse? What are the necessary conditions for economic growth? And so on.

So when Chris Blattman blogged on Chinese development last week, I read it with particularly interest. Blattman noted the negative coverage the Chinese purchase of a Spanish company received in the New York Times. According to the NYT,

The story of Gamesa in China follows an industrial arc traced in other businesses, like desktop computers and solar panels. Chinese companies acquire the latest Western technology by various means and then take advantage of government policies to become the world’s dominant, low-cost suppliers.

Blattman then goes on to deconstruct this narrative, noting that “there is nothing dark or nefarious here [just] good hold fashioned industrial policy at work.” He notes that the story of Chinese development-through-copying echoes previous patterns of development, including Europe in the 19th century, Japan after the Meiji Restoration, and the Asian Tigers in the 20th century.

Indeed, copying has long been a tool for developing countries to catch up with the industrial leaders of the day. For this reason, developing countries often afford much weaker intellectual property protection than developed countries. Weak IP protection, in other words, was frequently used as a developmental tool. As the U.S. Office of Technology Assessment noted in a 1986 report,

There have been political tensions between nations whose role as producers of intellectual property allowed them greater access to such products, and nations that imported technology products, and had only limited access to them.  When the United States was still a relatively young and developing country, for example, it refused to respect international intellectual property rights on the grounds that it was freely entitled to foreign works to further its social and economic development.

Ironically, however, today weak IP protection is often cited as a significant barrier to technology transfer. Further complicating the situation, the development of a uniform system of intellectual property protections deployed globally through the World Trade Organization also serves to preclude this avenue of development-through-copying.

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