In Malaysia, Protecting IP Fosters Economic Growth

Protecting IP to Foster Economic Growth in Malaysia

07.23.13 | By Jay Taylor

This week, negotiators conclude the 18th round of Trans-Pacific Partnership (TPP) negotiations in Malaysia. The agreement, which includes Malaysia and 11 other nations, not only provides the United States with an entrée into the Asia Pacific region, but also opens new markets for all participating countries. But for this agreement to be beneficial globally, it must include strong intellectual property protections.

As an innovation-based economy, protecting intellectual property (IP) is a key to the United States’ global economic success. Unfortunately, some perpetuate a misconception that lowering IP protection standards will give a country an economic boost. In reality, however, strong IP protections benefit all participating countries. In fact, a report from the Information Technology and Innovation Foundation indicated that strengthening intellectual property protections resulted in an influx of foreign direct investment and trade in high technology products, and also resulted in increased levels of research and development and innovation in developed and developing countries alike which ultimately will benefits patients.

Studies have found that every one percent increase in the level of intellectual property protection in an economy, as measured by the Patent Rights Index, results in an average of a 0.7 percent increase in the domestic level of R&D. For a country like Malaysia, this means there is significant opportunity for growth, especially when the country is looking to foster its own biotechnology sector.

Strengthening IP not only increases domestic levels of R&D, it also increases foreign direct investment (FDI). According to the Organization for Economic Cooperation and Development, a one percent change in the strength of a country’s IP rights environment results in a 2.8 percent increase in FDI. Failing to adequately protect IP means the companies that own these technologies will be at a disadvantage and, going forward, they may look to countries with stronger protections in place to safeguard their investments. When research and development moves, the direct and indirect jobs associated with IP-intensive industries go with it.

As an IP-intensive economy, the United States understands the importance of protecting intellectual property better than some of our trading partners. The challenge is helping emerging economies understand that it also benefits their long-term economic growth. The TPP is an unprecedented opportunity to set the stage for future trade agreements and as intellectual property becomes an increasingly vital component to the U.S. and global economies, ensuring its protection must be a priority.

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