Intellectual property rights and national innovation

INTELLECTUAL PROPERTY RIGHTS AND NATIONAL INNOVATION SYSTEMS. Some lesson from the Mexican experience. Draft paper, first version.

By J Aboites* and M. Cimoli** *UAM-X, Mexico city, **ECLAC, UN, Santiago, Chile.

During the second half of the 1980s, important changes took place in the regulatory framework for intellectual property rights (IPRs) in the industrialized and less developedcountries. The reasons behind these changes were, on the one hand, governments' and firms' growing acceptance of the importance of knowledge assets in international trade; and, on the other, the US government's pressure during the GATT negotiations — the Uruguay Round — to harmonize institutional norms regarding intellectual property rights. Underlying this proposal, most developed economies supportthe idea that the heterogeneity of IPRs in GATT member countries produces serious distortions in world trade, and particularly discourages foreign direct investment. The debate has concluded with an international proposal that was called Trade Related Aspects of Intellectual Property Rights (TRIPS). This initiative was passed in 1993, when GATT/WTO member countries approved TRIPS during theMarrakech Conference. Mexico has accepted this regulatory frmaework and introduced changes in the domestic law that regulates IPRs. This new norm has been introduced, together with the consolidation of the trade reform which began during the second half of the 1980s, and which concluded with the signing of NAFTA and Mexico's membership in the OECD. Mexico is a country that has implemented importanteconomic reforms as trade liberalization, privatization of state companies and economic integration with the USA and Canada (NAFTA). Since it was recognised as an engine for economic growth in the 1940s, Mexican manufacturing industries have been growing under a regime of intensive protection. The orientation maintained a strong inward bias, at least until the 1982 financial crisis. In contrast, themore recent period has undergone a major shift in its orientation: the nation faced a “radical shock” involving new economic reforms, in which the primary objective was to generate the conditions for faster economic growth and a new pattern of economic development. This shock should provide an effective way to retool economic activities, by combining a favourable environment in terms of relativeprices with an improvement in the incentives for technology upgrades. Since the beginning of this liberalisation period, and combined with the further privatisation of services, Mexican industry has experienced a profound structural transformation, and one of the major consequence has been a steady internationalisation process that is based on an external performance which the nation never hadexperienced before. The central idea of this paper is that these economic changes and the impact of the new IPR framework can not be understanding outside of the behavioural patterns and

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linkages that characterize the Mexican innovation system. Thus, the analysis of the new IPR framework is applicable to a collection of different agents –resident, no residents, transnational companies,local firms, universities, research centres and sectors- and the interactive linkages between them. In a such context, this paper argues that analyzing the experience of the new intellectual property law the use of patents is a weak incentive for the local creation and diffusion of technology; since, it does not favour the local efforts on R&D -in local firms and thorough FDI of transnationalcompanies- and relationships linking the agents of innovation system. In general, it is argued that the new IPR’s framework and the economic reforms do not provide incentives for the upgrading of technological capabilities in the Mexican system. Thus, both set of incentives interacting between them reinforce adverse mechanisms for the diffusion of innovation within the system. Section one presents a...