The Impact of Intellectual Property Rights (IPR) on the Gross Domestic Product (GDP). The Example of the "OAPI" Member States in Africa

CHAPTER ONE

1.0 INTRODUCTION AND BACKGROUND

According to the WTO “Intellectual property rights being rights that are given to persons over the creations of the minds of authors, there always exist an author for such rights who is also called the creator of the right. The worlds body in charge of intellectual property rights is an organization which carters and protects these creators of right to benefit from the fruits of their creation. The organization divides intellectual property rights it into two main parts. The organization divides this into two main parts namely; copyright and rights related to copyright, and Industrial property.

Economists usually use many abbreviations for development indices like GDP, which stands for gross domestic product and has become widely used as a reference point for indices such as; the health of national and global economies according to the IMF (international monetary Fund). However, according to the Cambridge dictionary GDP (Gross Domestic Product) is the total value of goods and services produced by a country in a year.

This study seeks to emphasize the effect of IPR constrains like Technological transfer, Research and development, literacy level, and good governance on the GDP of an economy, with specific emphasis on the members state countries of OAPI in sub Saharan Africa. This organization has its headquarters in Yaoundé Cameroon was created in 1977 on the 2nd of march, it also comprises of 17 member counties which are former colonies of France.

There exist some evidences on the economic growth effects of intellectual property rights but however there still exist mixed ideas on this debate which far from ending, in examining the direct relationship which the intellectual property rights has on gross domestic product. This study however focuses on the main determinants of growth like research and development (R&D). most studies have not been able to establish a glaring relationship between intellectual property rights and gross domestic product as well as the possible differences that exist between intellectual property rights on gross domestic product variables and economic growth. That is why we will be looking at the developed economies and the emerging economies approaches to examine this approach of the member states of OAPI.

The study will make use of the patent and utility model and also the performance indicators such as gross domestic product (GDP), foreign direct investment, population, manufacturing sectors and the available research and development information which can be obtained from various secondary sources like the world bank and the world intellectual property rights organization and the World Bank.

1.1 PROBLEM STATEMENT

In this light, this study will examine various indicators of technology transfer, there are rarely comparative studies for Africa (especially OAPI) and the rest of the world.

As a result of the contrast between the newly industrializing economies and the majority of African countries, this study seeks to establish if there is a relationship between variables affecting GDP growth such as technology transfer indicators which is a patent system, investment and (research and development). Therefore, as a basis for drawing lessons for the African continent particularly (OAPI), this study is a comparative and crossectional analysis of African Intellectual Property Organization (OAPI) comprising another 16 African countries and the Newly Industrializing Countries like some East Asian countries and the Developed counties (the west) of the world including the USA and Europe.

1.2 HYPOTHESIS

The hypothesis of this study has the following:

INDEPENDENT VARIABLE - INTELLECTUAL PROPERTY RIGHTS

DEPENDENT VARIABLE - GROSS DOMESTIC PRODUCT (GDP)

1.3 RESEARCH QUESTIONS

From the problem statement, the study has the following research questions:

(i) Is there a relationship between patenting activity and foreign direct investment?
(ii) Are foreign direct investment and GDP growth related?
(iii) Is there a relationship between patenting activity and GDP?

1.4 OBJECTIVE OF STUDY

This study has the following objectives with regards to, OAPI:

(i) To establish if there was a relationship between Investment in research and development and patenting activity;
(ii) To find out if there is a relation with foreign direct investment and patenting activity;
(iii) To establish if foreign direct investment influences GDP; and
(iv) To know the relation between patents and GDP.

1.5 SCOPE OF STUDY

This is a comparative study of the three regions represented by: OAPI, Emerging economies especially of Asia, and Developed economies,

This African Organization (OAPI) countries, the emerging economies include Industrializing Countries of Asia, and the Developed economies comprise of the USA, and western European countries of the EU.

The study will utilize data from ARIPO, OAPI, World Bank and the UNCTAD relating to patent filings and grants, investment in research and development, foreign direct investment and gross domestic product (GDP).

CHAPTER TWO

LITERATURE REVIEW

2.1 ECONOMIC ANALYSIS

Intellectual Property Rights (IPR) protection is seen as a very important factor to global international trade trends and activities. In order to have a better trade with less hitches, there is the need for adequate flow of information on the various goods and services and good mechanism put in place to regulate them. There exist an Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) by the World Trade Organization (WTO) which is in charge of regulating issues related to intellectual property rights both nationally and internationally. The agreement has resulted to an increase in the amount of trade and variety improvements of products at the international scene. According to an empirical study by Ivus (2010), there as need the need to improve the intellectual property rights level of most developing countries who where found lacking behind in relation to transfer from advanced to developing countries (Ilias and Fergusson, 2007).

2.1.1 Stages of Development in an economy/country classification

In order to achieve a successful economic development, there are given stages as other studies have proposed which can support a nations business environment. This involves supporting and encouraging productivity through ways of competivity of most nations across various sectors . There is a process having different measures of evaluation.

The first stage is the factor stage in which, economic development is focused on and in which competitive advantage where in the exclusive endowments of labor and natural resources are key instruments to economic development. This stage is characterized with relatively low wages.

There is the investment stage which is considered that efficiency in producing across nations in various sectors is an important way of obtaining competitive advantage. Most counties at this stage will focus on the manufacturing sectors and on outsourcing production activity in order to be profitable for them. This usually results in high relative high wages for most countries but however could be volatile due to economic downturns sometimes in the worlds global economy like financial crises some specific sectorial shocks.

Innovation Driven Stage

In the Innovation Driven Stage looks at how to produce new products and services using creative and advanced production methods in relation to the present existing ways and methods available in production at a global level which can lead to competitive advantage for a given nation. In this stage, the strengths of each country or nation is primordial in their ques to achieve this economic development goal because it determines how economically viable and vibrant a particularly endowed sector of an economy can drive the general growth of the nation as a whole. This because economic specialization is the modern way of increasing productivity for most countries where most nations will either use their absolute advantage or their comparative advantage in the particular sector of activity and invest their resources such that they and achieve economies of large production in that particular sector. However most of this innovation is achieved. But both physical and human capital are nevertheless important in research and development because human capital investment will utilize the physical capital to through research and development to achieve economic development for a nation. This is the only way new technology can be developed in order to be innovative for most nations.

2.2 IPR (LEGAL AND TECHNOLOGICAL ANALYSIS)

With a rapid growth of the digital economy, there has been broadband penetration of goods and services across different frontiers. This has posed a very huge challenge in global economic trends on ownership and patents for creativity. Also given the global village that the world has become with introduction of new technologies like the internet and other smart devices that work alongside these technologies, it poses a great deal to be able to fully vigilant on the legal pursuit of national and individual patents and creativity. Collective management has been seen as a way of managing this problem where organizations a accredited to control this patent activates in various regions of the world rather than a world body in charge as a whole. This makes it easier to follow up and fully implement control for owners. Through this scheme, specific policies are made at regional levels which follow the global world patent organization to implement order in across various group of countries. It is worth noting too that most of these regional policies are always adapted to suit the environment in which it being applied.

2.3 INNOVATION CONCEPTUAL FRAMEWORK

There are arguments among most authors about the existence of monopoly in sector and industries in the world . this is because the issue of patents and creativity where most countries or industries just follow or copy the existing trends developed by the leaders in that industry. This has been a very pertinent issue because most industry just don not invest in research and development but rather copy what others have researched and employed physical and human capital into for their products. As a result, there could exist situations too where some producers a really very good in their product development which gives the dominance in the give sector or industry. This give them some monopoly power in their market and across their product differentiation and diversity in that industry, causing them to determine what the consumers in that industry will consumer rather that what they want.

The point here being that inventors should devise a way to fully protect their inventions and creative works. This is because these inventor invest a lot and put in a lot of effort thereby incurring high levels of cost in other to innovate meanwhile those who copy , the followers hardly incur any cost to produce these products and I most cases zero cost. This trend in the world will lead to a situation where there is the lack of innovation in the world at large because if everyone tried to be innovative there will be an increase of products and verity.

CHAPTER THREE

METHODOLOGY

In this study, Vogel's conceptual framework of reregulation will be used as a model in examining the relationship between intellectual property rights and gross domestic product. A comparative case study approach of intellectual property systems in the developed world, developing world and particular case of OAPI{Africa} will be necessary to examine various regional differences existing and that shows how IPR systems affect GDP.

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