Intellectual property rights for appropriate invention

Many developing countries have argued that payments of royalties and license fees to foreign holders of patents and copyrights is unfair and that the holders of these rights have no moral or natural rights to protection in developing countries. The industrialized countries, on the other hand, have attempted to force developing countries to enforce stronger control over what they call "piracy" of intellectual property. This paper, taking the perspective of developing countries and particularly the newly industrialized countries in Asia, reviews various studies on the subject of IPR, beginning with a summary of IPR institutions and usage patterns. The paper then examines empirical evidence on the level and patterns of worldwide investment in research and development and estimates the social and private rates of return on research investments. The paper concludes that there is probably widespread underinvestment in research and development and related activities in developing countries. While the newly industrialized countries are all rapidly expanding such investments, the poorer countries are lagging behind due to a lack of incentives and effective institutions.