Emily von Zedtwitz, The University of California – Santa Barbara
Abstract
IP is an important tool for economic development as strong IP laws attract foreign direct investment (FDI), incentivize research and development (R&D), and increase local competitiveness, which in turn allows developing countries to engage in global trade. However, improper implementation and insufficient enforcement on the scope of IP protections imperil economic progress, especially in developing countries. Besides failures in the global IP system, several other potential reasons have been suggested as explanations for the Global South’s inability to catch up, but a scholarly consensus has not yet emerged. Based on a thorough analysis of the TRIPS Agreement and evidence of national strategies of successful development, I find that access to critical technologies is exacerbated by three influential elements: international IP law, national development strategies, and the private sector. This paper argues for comprehensive solutions that are multifaceted and involve several stakeholders on the international and national levels, while also taking into account the role of the private sector. By no means is IP reform the final step to economic development, as global partnerships in addressing other fundamental issues contribute equally to advancing access to innovation. However, IP reform is a critical starting point as it accelerates the cross-border movement of goods, ideas, and capital.
Keywords: Intellectual Property, Economic Development, Least-developed countries, International Law, World Trade Organization, World Intellectual Property Organization, Research & Development, Global Innovation Index
I. Introduction
Intellectual property (IP) laws have two main functions: (1) they disseminate knowledge across the globe, and (2) they provide economic incentives for continued innovation by privatizing knowledge based on ownership rights. IP rights, derived from legal frameworks, grant inventors exclusive control over their creations, covering patents, copyrights, trademarks, and trade secrets. They prevent third parties from unauthorized exploitation of protected inventions. This legal protection offers innovators the opportunity to benefit economically from their contributions to society, and this incentive spurs more innovation.
Global IP guidelines, most notably the 1995 Trade-Related Aspect of Intellectual Property Rights Agreement (TRIPS), have set a foundation for minimum levels of IP protection and offered guidelines to balance conflicting interests. The TRIPS Agreement was intended to standardize the enforcement of IP rights on an international level by creating rules and procedures that ensured IP protection itself did not become a barrier to legitimate trade. Nevertheless, the Global South often found themselves at the short end of the stick as stringent IP laws prevent their access to critical technologies needed for development, including for sector productivity, education, and public health. Before TRIPS, a large disparity separated the Global North and the Global South as most developing countries maintained low patent protections. In contrast, industrially advanced countries enforced strong protections with 20-year patent terms and nearly unrestrained monopoly rights. This disparity led to the creation of TRIPS which sought to bridge this divide, and offer both protection and flexibilities for innovation.
However, the global consensus on TRIPS’ limitations led to the Doha Declaration on the TRIPS Agreement and Public Health in 2001, as well as the 2003 TRIPS Council decision IP/C/28 (“Implementation of Article 66.2 of the TRIPS Agreement”). Reiterating the importance of public health in the context of global IP, the first declaration reaffirmed that TRIPS should not prevent members from taking measures to protect public health and emphasized the rights of eligible members to use flexibilities, such as compulsory licensing and parallel importing to address public health crises. The 2003 decision provided recommendations to effectively monitor the implementation of the TRIPS article on technology transfers. These two developments marked a critical acknowledgment of the need for a more balanced approach to IP that considers human development needs, especially in the Global South.
Despite the best intentions under which TRIPS and its subsequent amendments were created, the Global South still seems to miss out on the benefits of global IP. For instance, GDP growth, an indicator of economic development, in LDCs remained well below the 7% growth target in 2023. One more example as to how TRIPS has not lived up to expectations is that its compulsory licensing provision has only been used once since TRIPS’ inception. The guiding question here is why TRIPS – which was largely designed to support the development of the Global South – has been ineffective in helping LDCs develop their economies faster?
I argue that there are two major flaws: (1) inconsistent reporting continues limitations in access to technologies, and (2) restrictions on public health access. I draw on statistics and evidence to present possible reasons for its shortcomings, and in doing so, conclude that a multifaceted approach is warranted. Not only are global actors responsible for establishing sound regulatory frameworks with enforcement mechanisms, but national-level actors must also prioritize internal development through strategic program implementation. Finally, to increase support for development initiatives and find financing solutions to budget constraints, traditional private sector for-profit investments must likely be complemented by initiatives inspired by the UN’s sustainable development goals, such as impact investing.
II. Background on LDCs and SVEs
Globalization and the rapid normalization of free trade relations have been a powerful driver of economic growth as they have institutionalized and engaged countries in global value chains (GVCs), optimizing skills and increasing productivity rates. This unprecedented linkage of markets and exchange of goods and services presented vulnerable countries with an opportunity to participate in global trade on an equivalent scale. Yet, it is clear that not all countries have reaped equal benefits from globalization and multilateral trade. Least-developed country (LDC) participation in international trade remains marginal and stagnant since 2008 at about 1.1%. At the same time, LDCs make up nearly 12% of the world population but their share in GDP is only 2% of that. This stark disparity highlights the inequities in the global trading system, and demands further analysis of the reasons, effects, and potential solvents to address the gap. Engagement in international trade is important because it is an indicator of economic growth potential, and characterized by its ability to add value in crucial global sectors. When developing countries are unable to participate in global trade, they are unable to derive benefits from cross-border transactions, which slows economic growth and gives rise to poverty.
A country’s economic growth is defined as “a long-term rise in capacity to supply increasingly diverse economic goods to its population, this growing capacity based on advancing technology and the institutional and ideological adjustments that it demands.” An OECD report identifies economic growth as the most effective tool for reducing poverty and improving living standards in developing countries. For developed countries, high economic growth results in increased firm profitability, enables more spending on R&D which can lead to technological breakthroughs, and increases confidence for firms to take more risks and innovate. Accordingly, “citizens of a country with high GDP are likely to have high incomes, people are likely to be earning and spending more and businesses are likely to be hiring and investing more.” High GDP translates to higher incomes and spending patterns, which benefits employment and strengthens the economy.
Alternatively, there are currently forty-four countries that participate least in global trade, and classified by the United Nations as least-developed countries (LDCs) and are geographically located in Africa (32), Asia and the Pacific (11), and the Caribbean (1). LDCs are deemed “highly disadvantaged in their development process, for structural, historical and also geographical reasons” and are classified based on average income, human asset measurements, and economic vulnerability to external shocks. Another sub-category of countries, although not officially recognized as such by international bodies, are small- and vulnerable economies (SVEs). While SVEs share common economic vulnerabilities as LDCs, they do not enjoy the same special and differential treatment under WTO agreements. Many LDCs and SVEs are highly skilled in agricultural products, such as cocoa, coffee, and cotton, which makes them highly reliant on raw materials. These commodities are low-value and volatile, which means their prices can suddenly crash due to external global market forces and unpredictable natural disasters. Volatile commodity prices impact LDC growth prospects with 38 out of 45 LDCs classified as commodity dependent in 2023. Simultaneously, these countries operating at the bottom of the GVC import high-value goods like medicines, electronics, and finished goods leading to trade deficits, as import expenditures exceed export earnings. Due to heavy reliance on tangible assets, commodity-dependent countries struggle to move up the value chain for goods, making their economies vulnerable to conflicts, pandemics, climate impacts and global supply shifts. Without economic resilience, one shock can cause major setbacks. Only through innovation and tech-enabled industries can developing countries start increasing productivity and diversifying exports to better withstand economic changes. This raises a central question: how can coordinated, multi-stakeholder solutions in IP disrupt the cycle of dependency and create conditions for sustainable development?
III. Global Frameworks: IP and Development
Widespread discussions have emerged from the debate in IP priorities between the developed and the developing world. Developed countries assert that IP protections are fundamental in incentivizing innovation and creativity, and that without it, low competitiveness and stagnant investments will undermine innovation. On the other hand, developing countries claim that stringent IP laws undermine economic development as flexibilities set under global IP law, such as TRIPS, are not invokable and systematically flawed. While the TRIPS Council has attempted corrective measures with the addition of Art. 31bis, its efforts prove unimpactful.
A. The Promise of IP
The global IP regime has been fundamental in catalyzing groundbreaking inventions. The 21st century, marked by digitalization and the rapid advancement of modern technology, recognized the need for IP laws to protect novel and momentous inventions. Technology and digitalization have transformed the way humans live and interact with the world, and increased efficiency in a multitude of ways: communication, transportation of goods, ease of travel, among others advancements helped accelerate development of new technologies to support the collective vision of a high-tech future. The promise of IP finds its roots in the requirement to obtain authorization and pay adequate remuneration in exchange for the rights to exploit protected assets. Right holders view these requirements as an equitable way to recover R&D costs and provide incentives for continued innovation. Developing countries creating conditions conducive to innovation attract technology-related FDI which, in turn, supports their domestic development. Global IP laws ensure adequate protection to streamline this process.
Given the challenges developing countries face in implementing global IP laws, TRIPS has embedded certain flexibilities for LDCs who, for instance, receive special concessions, such as extended transition periods or exceptions for compulsory licensing. On paper, these flexibilities significantly ease the burden on LDCs, however, in practice, they often do not work. A telling statistic highlights the limited effectiveness of these flexibilities: since TRIPS was ratified in 2001, only one international compulsory license has been successfully implemented, despite numerous global crises that would have justified their use. Similar trends can be observed with minimal technical assistance initiatives carried out, and the emergence of IP clauses known as TRIPS-plus.
B. The Limitations
This subsection is dedicated to uncovering the fundamental limitations of global IP law, focusing closely on TRIPS provisions and its flexibilities. TRIPS, established in 1995, seems considerably out of date in a world with iPhones, electric vehicles, artificial intelligence, and other fundamental innovations introduced in the 2000s. Strong IP protections, once necessary to protect original innovations, may no longer apply in the same way to mainstream technologies. Yet, these rigid protections continue to benefit nations with pre-established innovation ecosystems. As developed nations expand their protected assets, the developing world is deprived of the opportunity to break into the system that rewards innovation, which ultimately limits access to critical technologies desperately needed for early-stage development. Now it has become more widely “recognized that innovation is not just about high-technology products, but that innovation capacity has to be built into the early stages of the development process to gain the learning capacities that will allow ‘catch-up’ to occur.” Institutions and robust systems – such as proper education, access, and basic skills – have also been integrated into developed countries for decades. Developing countries need capacity to ensure that transferred technologies can be implemented and accessed by the local system. The accessibility gap isn’t a problem that can be ignored anymore. Our global economy allows localized issues to transcend borders and become global challenges, as was seen by the rapid spread of the COVID-19 pandemic. Thus, “current IP laws [have not] adapted to the realities of [the] multicultural societies and fast-changing economies” we see today. To remain relevant and address inclusive development issues, focus on innovation is key. The ability to add value to the global economy, to manufacture and contribute ideas, is what truly accelerates development and can only be achieved through access to basic resources and technologies. The question at issue is not how to weaken IP protections, but rather, how can inclusive and sustainable development be driven by IP?
A deep dive into the provisions of the TRIPS Agreement will allow us to examine how policy deficiencies on the international level directly hinders economic progress and perpetuates LDCs’ dependence on developed nations. In practice, the TRIPS flexibilities – such as technology transfer provisions, compulsory licensing pathways, and technical assistance efforts – intended to overcome these barriers and alleviate the burden on LDCs have not proven to be effective mechanisms.
- TRIPS is Killing the Generics Industry
TRIPS has been highly criticized for fragmenting the generic drug industry. By requiring patent protections for pharmaceuticals and extending patent terms, TRIPS delays entry of cheaper generic versions into the market. Many essential medications are unaffordable to populations most in need due to monopolies setting high prices on patented medications. During the HIV/AIDS epidemic and the COVID-19 pandemic, it became apparent that stringent IP rights were an obstacle to the rapid production and distribution of vaccines, diagnostics, and treatments. One particularly overlooked barrier within this framework is data exclusivity, which poses a further obstacle to generic drug production even after patents expire. The concept of ‘data exclusivity’ originated in 1984 with the United States enactment of an Act which introduced a period of five years of data exclusivity, and prevented generic manufacturers from obtaining market approval for generics based on the originator’s data. Instead, a generic competitor must either independently conduct its own costly clinical trials or delay its application until the exclusivity period ends. TRIPS incorporated this idea into Art. 39(3) which instructs countries to protect undisclosed test data against unfair commercial use, except when necessary to protect the public. However, it provides no guidance on when such exceptions apply. In the interest of making affordable medicines more accessible, it is essential to clearly define the conditions under which exceptions can be invoked. Otherwise, discrepancies may arise between countries’ interpretations, ultimately delaying the timely production of lifesaving generics.
- TRIPS-Plus Measures
As mentioned earlier, TRIPS sets the floor for minimum IP protections, rather than a ceiling. Thus, countries are free to impose stricter protections within free-trade agreements (FTAs), which are termed TRIPS-plus provisions. These provisions can “expand existing obligations under TRIPS (such as patent term extensions) or restrict the use of safeguards and flexibilities (such as restrictions on parallel imports or compulsory licensing).” The 1994 North American Free Trade Agreement (NAFTA) was the first supranational agreement to adopt data exclusivity obligations that protected clinical test data against disclosure and unfair commercial use. More recently, the Trans Pacific Partnership (TPP) exemplifies how incorporating data exclusivity provisions in FTAs have become a new standard – it mandates eight years of data exclusivity with additional measures applied.17 If the TPP is ratified, a total of 12 countries representing 40% of global GDP will be required to incorporate these measures.18 In another example, before allowing its accession to the WTO, China was pressured by the United States’ blacklisting of China in the U.S. Special 301 Report to widen the scope of patentability, to extend terms of protection, and to enforce stricter protections on medicines. Evidence showed that not only did TRIPS-plus measures delay the marketing of generic drugs, but they also played no significant role in incentivizing more pharmaceutical innovation. TRIPS-plus measures simply elevate the minimum level of protections and subject developing countries to more hardships in acquiring and using protected IP. Whether or not with malicious intent, developed nations exploit the weaknesses of LDCs, who are placed in unfavorable negotiating positions which ultimately pressures them to accept TRIPS-plus provisions despite their detrimental impact on economic growth. While TRIPS-plus measures are nowhere explicitly mentioned in the TRIPS Agreement, TRIPS by nature allows these provisions to exist. To properly assess its impact on development, it is imperative to develop standardized reporting methods to accurately gather diverse data. It should also be stated through a declaration that additional IP measures should not contradict the flexibilities provided by TRIPS.
- TRIPS Compulsory Licensing: A Failed Mechanism
The compulsory licensing mechanisms under Art. 31 and 31bis of TRIPS have failed to fulfill their intended purpose. To understand this failure, it is important to first consider the mechanism’s original intent — protecting public health in the face of patent-driven drug pricing. The introduction of patents on pharmaceutical products have “raised the prices of drugs in many developing countries – by as much as 90% according to some estimates. This [is] a serious burden on health care for the poor, hampering the supply of AIDS drugs, for example.” Those seeking a compulsory license typically have unsuccessfully attempted to negotiate a voluntary license with the patent holder. Since pharmaceuticals are often viewed as a public health good with special status, compulsory licenses allow rights-seekers an alternative pathway to obtaining and producing the needed pharmaceutical process for the benefit of society. Art. 31 outlines the circumstances in which international compulsory licenses may be granted and the scope to which they may be used. Several shortcomings were revealed – particularly faulty were Art. 31(f) and (h), concerning “[authorization] predominantly for the supply of the domestic market” and “adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization.” Under Art. 31(f), the use of granted compulsory licenses could only supply the domestic market, meaning that any export of drugs to developed or least-developed countries would violate TRIPS. In Art. 31(h), pertaining to the remuneration of rights holders, the problem remained of the inability to compensate and the absence of standards in determining the appropriate “economic value of the authorization.”
The 2001 Doha Declaration reaffirmed the right of WTO Members to protect public health and prompted the creation of Art. 31bis as a corrective measure. Titled “Other Use Without the Authorization of the Right Holder,” Art. 31bis provides specific exceptions to Art. 31’s provisions, and attempts to address the shortcomings of Art. 31(f) and (h). In particular, Art. 31bis allows eligible importing countries to invoke the international compulsory license provision in times of extreme urgency, such as in national health emergencies. Despite these corrective efforts, Art. 31bis has been used only once. In the 2007 case that involved Canadian shipments of the Apotex drug “TriAvir” to combat HIV/AIDS in Rwanda, Art. 31bis revealed systemic flaws. The requested drug shipments took three years to fully deliver, citing cumbersome bureaucratic processes as the main reason for delay. In situations of extreme urgency, this timing is not reflective of the dire circumstances of a “national emergency.” The significant delay made clear to many member states that the mechanism fell short of its intended promise and could not be relied upon in times of urgent public health need.
There are several administrative burdens to take into consideration: first, in contrast to LDCs who, by definition, are assumed to have no pharmaceutical manufacturing capacity, resource-poor developing countries that are not classified as LDCs must prove that they lack sufficient manufacturing capacity in order to qualify under the Art. 31bis framework. The Annex to TRIPS also outlines meticulous tracking of pharmaceuticals under compulsory licenses, requiring information on quantity, specific destination, and for products to be labelled and packaged distinctively. The labeling provisions, which require pharmaceutical products to be explicitly identifiable and meticulously tracked, aim to prevent the spillover or re-exportation of these products into markets where the license does not apply. Such diversion would allow lower-priced drugs to undercut full-priced versions in non-participating markets, threatening commercial interests.
A further complication that highlights the outdated nature of Art. 31bis is the difference between chemical-based and biologic drugs. Chemical-based pharmaceutical formulations are simple and come in the form of a pill that is easily recognizable under the labeling requirement if colored, shaped, or labelled distinctively. Biologic formulations, typically stored as liquids in vials, cannot be physically marked or identified. The shelf life, storage, and transportation of biologics require inflexible conditions that many importing countries may struggle to meet. Production of biologics is also more complex and requires vastly different lab setups and resources, which countries with insufficient production capabilities are not expected to have. As one supporting statement notes: “Biologics are naturally less stable, more complex, and often heat-sensitive,” meaning they must be shipped under tightly controlled conditions that exporting countries may not be able to guarantee. These unique logistical and technological demands present challenges far beyond those posed by chemical-based formulations, underscoring the need to modernize the compulsory licensing framework.
- Technology Transfers: Incomplete Reporting Mechanism
Despite having an obligation to provide assistance, developed countries often evade their commitments outlined in TRIPS. The obligation to transfer technologies is a vaguely mentioned provision in Art. 66(2) of TRIPS, stating that “developed country Members shall provide incentives to enterprises and institutions in their territories for the purpose of promoting and encouraging technology transfer to least-developed country members in order to enable them to create a sound and viable technological base.” In light of Art. 7, which mentions “the transfer and dissemination of technology,” TRIPS does not provide extensive technology transfer provisions. There are no minimum standards, and the accountability measures provided are weakly enforced. Members, considered developed, are required to submit reports on activities undertaken to meet these obligations every three years, however, a closer look reveals that the lack of uniform reporting format between Members and within Member States in different reports result in scattered data with varying degrees of specificity. For example, the latest published report by the United States in 2024 provides minimal detail as to the outcomes of their initiatives, and many omit the category that asks them to state the financial resources dedicated to projects. A total of 21 countries have ever submitted a report. According to the OECD definition of a “developed country,” 70% of required Members have ever submitted a report. Limited technology transfer and reluctance to license technologies critically restrict access to education, training, and technology management. As a result, the cost of education spikes and the slowed transition towards digital platforms inhibits development in human capital. Without the necessary human capital to teach social entrepreneurship, business and management expertise, the drive for social entrepreneurship is not cultivated. This topic will be explored in a later section. The exclusivity of patents and copyrights restrict knowledge-sharing, and can especially hurt sectors developing economies traditionally excel in. Outdated agricultural technologies and the growing need for sustainable solutions to climate issues can significantly impact this important sector, undermining their role in global supply chains. Various international organizations, such as UNCTAD and the ITU, have mandates to bridge the digital divide and promote global connectivity. Progress in these critical areas can boost infrastructure and expand 5G networks, which can aid in the effective implementation of technology transfers and create greater production-capacity in previously unconnected areas.
In sum, TRIPS shapes the IP system on a global level, stating objectives and member obligations to improve access to the trade of IP. Despite the promising role of IP for development, a deep analysis of TRIPS and supporting research reveals that flexibilities are not as useful as they were thought to be, suggesting reform is imperative. Ultimately, while IP law reform is a necessary step toward equitable economic development, its success depends on a broader framework of multilateral cooperation and specifically efforts at the national level. While aligning with global IP standards is essential, innovation ecosystems cannot thrive without domestic investment and policy alignment, as the following section explores.
IV. National-Level IP Areas of Priority
Governments are also responsible for adapting national IP policy to the new digital age, to mobilize domestic interest in innovation and facilitate cross-border trade of crucial technologies for development. Needless to say, in order to profit off the IP system, resources such as technical knowledge, field expertise, production capacity, and a robust economy are all needed.
A. Compliance with Global IP Law
Developing countries must build robust, efficient IP institutions that align with global systems while avoiding bureaucratic delays that deter innovation. Burdensome filings requirements and approval delays can discourage innovators from seeking IP protection, especially when the system lacks transparency and predictability. Administrative bottlenecks undermine confidence in IP systems and diminish the perceived value of rights protection. Failure to align with global IP standards, such as not recognizing foreign patents, can also lead to other consequences such as trade barriers (e.g. sanctions) and potential foreign investors exercising caution when making investment or licensing decisions. This leads to missed economic opportunities to engage in cross-border collaborations, particularly in technology transfers and licensing agreements. When developing countries do not honor an international IP agreement they are a party to, the fear of IP insecurity scares away potential investors and FDI, resulting in an uncompetitive environment and low rates of innovation.
In a case of study of China’s adoption of data exclusivity, it is evidenced that alignment of IP rights to global standards had a positive impact on the level of accessibility of medicines in China. Since China’s accession to the WTO, its pharmaceutical industry has experienced rapid development from its 2001 pharmaceutical and medicine manufacturing industry assets of 328.11 billion yuan to 2019 asset levels reaching 3398.15 billion yuan. The amount of assets is 10.35 times that of 2001. From an economic standpoint, the increased level of protection in China played a crucial role in promoting trade and attracting foreign investment. According to the study, the evidence “suggests that US-headquartered multinational enterprises are sensitive to improvements in [intellectual property rights] in developing countries in making foreign location decisions. Strengthening the legal infrastructure in accordance with global IP law – through IP courts, clear dispute resolution mechanisms, and enforceable regulations is essential to building trust in domestic IP systems and attracting long-term investment. The World Intellectual Property Organization (WIPO) even offers streamlined services to assist developing countries in implementing global standards into national legislation. However, policy support relies entirely on requests by the country itself. Therefore, developing countries also have a responsibility to align with global laws and seek help when they are unable to independently do so. Alternatively, developing countries may even seek to form regional collaborations to bolster regional IP infrastructures. Harmonized policies across the region could facilitate easier access to global IP markets for countries that lack individual resources to do so.
B. Investing in R&D
One of the most important areas of domestic policy is R&D investment. Shifting the focus from imports to self-sufficiency and internal innovation is a powerful way to reduce reliance on foreign goods. Without sufficient financing for R&D, the innovation ecosystem remains weak and makes it difficult for domestic companies to compete in global markets. The 2024 Global Innovation Index (GII), published by WIPO, provides a macroeconomic breakdown, in ranking order, of the capacity and achievements of global innovation by country. It is a practical tool in shaping innovation policies by measuring 78 indicators that provide policymakers with comprehensive data to assess the strengths and weaknesses of their country’s innovation ecosystem, allowing them to fine-tune institutional strategies with more accuracy. Some key indicators include R&D spending, IP output, infrastructure and human capital. The results of the GII show that the world’s most innovative economies in 2024 were Switzerland, Sweden, the United States, Singapore and the United Kingdom. China was the only middle-income economy in the top thirty rankings, and South Africa leads the GII among the low-income economies. Analysis reveals that the top fifteen most successful economies have one notable commonality – very high R&D spending. In 2023, Southeast Asia accounted for 40% of global R&D, followed by the United States and Europe with 29% and 21% spending, respectively. The report reveals that R&D spending in other regions still lacks enormously. On average, a Latin American country spends only 0.5% of their GDP in R&D – a figure led by Brazil, which is the only country in the region that spends more than 1%. China spends 3.4% of the GDP in R&D and countries like Turkey or India are around 1.3% and 1.6% respectively. These statistics reveal the general trend that increased R&D spending is positively correlated to innovation.
China is a prime example of how targeted R&D has accelerated its development at unprecedented speed. Designated Special Economic Zones (SEZs) have been a driver of China’s economic growth. First established in the late 1970s, these zones were created to “experiment with market-oriented policies and develop pockets of economic activity.” While several types of SEZs were established to target specific industries, high-tech development zones highlight truly how influential these zones were in boosting growth. These hubs were intentionally designed to stimulate innovation by strategically attracting foreign investors engaged in “R&D, high-tech manufacturing and advanced industries such as information technology, biotechnology and pharmaceuticals.” The specialized environment offered incentives such as tax benefits, infrastructure support, access to skilled professionals, IP protection, technology transfer programs, and collaboration opportunities with academic institutions, industry partners and research facilities. While multiple factors contributed to China’s growth, its proactive IP policies and R&D-focused economic zones demonstrate how national frameworks can accelerate innovation and attract high-tech investment.
Developing countries can look to examples of success when recalibrating IP laws to foster a culture of R&D and nurture startups by enabling promising innovators to scale their ideas. However, a comparison of statistics reveals that a broader shift toward an innovation-driven mindset has yet to take hold. Citizens of LDCs filed only 1,357 patents in 2020, compared to 875 in 2011 – a marginal increase. As a share of global figures, that number is almost zero. To stimulate innovation, policies should focus on capitalizing on their abundant but underutilized natural resources. The so-called ‘resource curse’ can be overcome by prioritizing the development of agricultural and manufacturing capacity over mere resource extraction. In fact, “agricultural R&D has a greater impact on poverty reduction than most other public investments.” Where R&D infrastructure and technological capacity are limited, governments should pursue collaborations with academic institutions and technology providers to ensure not only technology acquisition, but also its effective implementation and subsequent ability to develop its own technologies.
C. Attracting Foreign Investment
The 2024 GII shows that venture capital activity, which is critical for funding the growth of start-ups and scale-ups, has sharply declined. In 2023, the number of business deals fell by 10%, while total funding dropped by 40%. Startups now face mounting challenges in securing investment, as VC firms increasingly prioritize countries with stable IP environments and clear return-on-investment signals. Notably, Africa and the Asia-Pacific experienced the most significant declines in VC flows in recent years. To reverse this trend and attract foreign investment, governments must implement policies that foster investor confidence. These include tax incentives for priority sectors, recognition of foreign patents, education reforms and strategic investments in infrastructure and research. Developing countries need to reassure potential that their investments are safe, particularly by safeguarding against issues like counterfeit goods and deceitful competition. Tools like the GII are essential for monitoring progress and identifying gaps in policy effectiveness. These insights highlight a fundamental reality: IP protections are not harmful in all cases as balanced IP laws can also streamline FDI and enhance a country’s ability to perform competitively in the global innovation landscape.
D. Science and Technology Education Models
The importance of education and training in development cannot be overstated. According to UNCTAD, the “prior technological knowledge base determines the ability to make, recognize, adapt, adopt and generate value using new or novel knowledge or technology. Establishing a knowledge base is necessarily a matter of policy and determining what level suits current development goals requires an important degree of interaction among firms and academic, training and educational institutions.” Initiative by national governments to support education is heavily interconnected with funding public-private partnerships to bring technology and digital literacy into schools and universities. Training programs that align with the future global industry demands such as AI, machine learning, and biotechnology could help develop local talent and make these countries more competitive in the global market. The investment in people and ideas begins early in the education system with “prior technological knowledge” and increases continued access to technologies, financial and digital literacy, thereby crafting a culture for entrepreneurship.
In the same way as global IP reform is necessary, national-level reforms are not a substitute but a necessary complement. A resilient IP ecosystem begins with domestic commitment – to education, innovation, enforcement, and investment – and is only amplified by international cooperation. For developing countries, tailored national strategies backed by external support offers a real chance to transform IP from a barrier into a tool for development.
V. The Private Sector and a Human-Centered Framework for IP
A. Rethinking Profit
Traditionally, profit has been defined through a corporate lens, emphasizing shareholder returns, revenue growth, and increasing company value. However, the human-centered framework for IP calls for a shift toward “profit-with-purpose” models – approaches that combine financial returns with social and environmental impact. This evolving perspective supports impact investing, where decisions are made not only based on profitability but also on the potential to generate positive societal outcomes. By striking a balance between financial gain and public good, impact investing enables social enterprises and non-profits to scale their work and expand their influence. In this context, IP becomes a tool for inclusive growth. These practices challenge conventional IP systems focused on exclusivity, instead prioritizing accessibility and public benefit. In doing so, they democratize innovation and ensure that life-saving medicines, digital tools, and clean technologies are scalable and accessible in underserved markets. Rethinking profit in this way realigns business incentives with human development and sustainability, offering a more holistic definition of value creation.
B. Social Enterprises and Inclusive Innovation
Impact investing is closely related to the rise of a human-centered kind of entrepreneurship: social enterprises. There are an estimated 11 million social enterprises globally, contributing to two trillion U.S. dollars in GDP, and are most prevalent in Brazil, Panama, Canada, the United Arab Emirates, India and the United States. The 2024 global average of early entrepreneurs being social entrepreneurs is one in five, showing how more people see the value in building targeted social enterprises. Social entrepreneurship is about leveraging IP and business strategies to achieve social change. Unlike traditional businesses that focus primarily on financial returns, social enterprises prioritize social, environmental, and community goals. These models challenge conventional IP frameworks that emphasize exclusivity and control, and merge the concepts of business growth with meaningful societal impact. In developing countries, these enterprises are critical to fill large gaps in access to healthcare, education, and clean energy – areas where traditional markets have failed. For instance, health-tech start-ups using frugal innovation and low-cost licensing have increased access to life-saving diagnostics in rural areas. Similarly, education tech platforms, often powered by locally developed IP, are reaching remote schools through offline-compatible tools. These inclusive innovation models illustrate how reimagining IP can directly support development goals by empowering underserved communities, fostering local solutions, and reducing dependency on foreign technologies.
VI. Development Ecosystem Beyond IP
IP is only one structural contributor of economic development. While innovation is a core driver of technological advancement, it cannot by itself lead to growth. Economic development also requires coordinated efforts in human development across infrastructure, digitalization, education, and sustainable climate policies. Human development improves quality of life, which ultimately enables individuals to contribute more to society. Funding is one of the most prominent challenges in moving forward with other reforms for development. Africa, the region with the most LDCs, faces a $200 billion annual SDG funding gap, which exacerbates challenges in achieving critical development goals. Given this, impact investing and IP reforms can provide pathways for private financing to support sustainable development. By adopting inclusive IP models, governments and social enterprises can attract the necessary capital to bridge the funding gap while ensuring that technological innovations directly benefit vulnerable populations. The United Nations, alongside multilateral financial institutions like the World Bank, can play a pivotal role in facilitating IP reform and securing funding for development. By fostering global cooperation on IP capacity-building, technology transfer agreements, and research collaboration, these institutions can help bridge the gap between intellectual property protections and sustainable development goals.
VII. Conclusion
Human, economic and technological development must coexist. The world we are shaping for future generations must evolve to reflect shared human goals by reforming international and national IP laws, redefining profit, and with a common recognition that supporting development in fractured and emerging economies will collectively make the world more resilient. Although TRIPS intended to balance IP protections with access to technology and pharmaceuticals, in its current state it functions more as a set of guiding moral principles. Its ineffectiveness is largely due to insufficient international enforcement and weak national implementation. To meet long-term sustainability goals in economic development, actionable initiatives must be undertaken on multiple levels. This research paper concludes, through detailed analysis of IP laws and relevant case studies, how IP laws can be leveled to meet the needs of various parties through international, national and private sector reform. Simultaneously, these must be complemented by broader initiatives aimed at long-term economic stability, including expanding production capacity, lowering debt, reducing food insecurity, eliminating corruption, and diversifying exports. Ultimately, reform in IP regulations is a means, not an end, and must be paired with global partnerships and joint initiatives to advance global prosperity – especially as more global challenges demand innovation, and innovation without access is ultimately meaningless.
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