Abstract

The TRIPS-Agreement under the umbrella of the World Trade Organization (WTO) forms a cornerstone in the international regulation of intellectual property rights protection. The agreement leads to an international strengthening of intellectual property rights by binding developing countries to adhere to protection standards common in industrialized countries. The study at hand answers the question how the international strengthening of intellectual property rights influences the creation and use of technology in developing countries. Analyzing theoretical and empirical work leads to the conclusion that the international regulation of intellectual property rights protection should be regarded critically. It leads to a significant transfer of innovation rents from developing to industrialized countries since developing countries can no longer use technology at marginal prices as free riders. The implied static welfare losses can be compensated in advanced developing countries by new technologies that will be transferred to the country via contractual channels (Foreign Direct Investment or markets for technology). On the other hand, less developed countries with weak technological capacities will rather be harmed even in the long run. This result is not in the long-term interest of industrialized countries and contradicts important political declarations of intent like the Millennium Development Declaration. The study at hand sheds light on this reasoning by using the pharmaceutical sector as a special case where intellectual property rights protection causes visible conflicts that have to be dealt with.

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