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Intellectual propertyIts role in growth, productivity and jobs in the (ICT-

based) knowledge society

Claudio Feijóo1

1Universidad Politécnica de Madrid, Spainclaudio@feijoo.net

Seminario Gestión de la Propiedad Industrial e Intelectual en el Sector TIC

Escuela de Organización Industrial

Madrid, 16 December 2009

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Index

1. Background. The policy framework

2. A bit of economics: from innovation to (sustainable)

growth and employment

3. The role of ICT in innovation and growth

4. Why intellectual property?

5. Conclusions

(Spain: outside looking in)

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1. Background. The policy framework

2009, a turning pointFailure of the Lisbon strategy: EU the most competitive, knowledge-based, economy by 2010. Launch of the 2020 strategy: sustainable growthGlobal economic crisis: changing the foundations, recovery based on fiscal policies and increasing competitiveness

ICT do have a key role in the digital economy (Digital Agendas)Skills for tomorrow’s needsEnergy efficiencyNew technologies for low-carbon marketsNew infrastructures to promote innovation Opportunities for SMEs, both in production and services sector Innovative start-ups generate high value jobs and contribute to regional development More efficient government services Participation (social and user empowerment)

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2. Economics: innovation and growth (1/3)

Schumpeter’s approach (“new growth theory”) Innovation: “change that creates a new dimension of performance”

(Drucker, 1994). Innovation directly impacts on productivity (level of

output per time) and growth

Types of innovations: introduction of new production processes

new products and services

new management methods

new organisation of firm activities

Innovations are created by the self-interest of firms, entrepreneurs

and researchers who expect to be rewarded with rents in the case of

their innovation being successfully implemented in the market

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2. Economics: innovation and growth (2/3)

The regional perspective. Lessons learned "The only meaningful concept of competitiveness (comparative efficiency)

at the national level is national productivity” (Porter, 1990)

It is the innovative effects of domestic companies what mostly accounts for productivity growth and not the international spillover

R&D: key role in the production of new knowledge and innovations

Countries with large R&D investments can grow faster

So

urce

: Pyyh

tiä

(20

07

)

The rate of return of R&D is extremely high. The social optimal level of R&D is higher that private markets can produce

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2. Economics: innovation and growth (3/3)

The ICT sector is by far the largest R&D investor, R&D employer and R&D performer in the EU (as it is in the USA and Japan).

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3. The role of ICT (1/7)

ICT: from inventions to innovations ICT technological inventions (micro and nanoelectronics, software

applications, broadband internet, mobile communications, ...) have given rise to innovations and changes

A period of growing and self-reinforcing number of solutions, with direct incidence on economic activity both in terms of overall economic growth but also in terms of economic efficiency (productivity)

So

urce

: Pe

rez

(20

03

)

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3. The role of ICT (2/7)

A summary of the impacts of ICT … ICT capital investment raises output and labour productivity Rapid technological change in ICT producing industries leading to Total Factor

Productivity (TFP) growth TFP growth in industries that make intensive use of ICT.

… and their consequences Need of an structural framework: regions with a high proportion of ICT-

intensive industries (banking, telecommunications, wholesale, etc) Adequate institutional framework (market behaviour, regulations, venture

capital, business culture, access to human capital, etc) Time lag due to the need to raise investments in human capital (training,

education, motivation, competences, etc), in knowledge capital (research and development) and to introduce organizational innovations.

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3. The role of ICT (3/7)

Summary of the conceptual model

So

urce

: IPT

S

(20

09

)

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3. The role of ICT (4/7)

Not each ICT the same. ICT usage -> Software Innovations in ICT taking place outside the ICT sector

So

urce

: IPT

S

(20

09

)

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3. The role of ICT (5/7)

EU: established companies, less investment

So

urce

: IPT

S

(20

09

)

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3. The role of ICT (6/7)

Spain, ICT R&D well below average

So

urce

: IPT

S

(20

09

)

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3. The role of ICT (7/7)

Spain, low-tech economy

So

urce

: IPT

S

(20

09

)

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4. Why intellectual property? (1/5)

Innovation additional advantages: competitive advantages (first mover, intangible assets, branding, de

facto standardisation), …

… maintained over time

How to protect innovation? Trade secret

Intellectual property – copyright

Intellectual property – patents, trademarks, industrial designs, …

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4. Why intellectual property? (2/5)

Intellectual property - copyright Promote and reward the creative process

Software – applications

Digital content

Intellectual property - patents Monopolistic rents in exchange of disclosure (up to 20 years)

Accountable intangible assets (financing, venture capital, …)

Strong protection

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4. Why intellectual property? (3/5)

Decline in ICT patents from 2004 due to innovation in software?

So

urce

: IPT

S

(20

09

)

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4. Why intellectual property? (4/5)

Spain historically very low position

So

urce

: IPT

S

(20

09

)

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4. Why intellectual property? (5/5)

Still valid in the new paradigms of open and user-driven

innovation

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5. To take home … (1/1)

Innovation, productivity and growth are inextricably linked in the

digital economy

ICT innovation permeates all sectors of activity (and its difficult to

measure)

Innovation is protected by trade secrecy and intellectual property

(not just patents)

In the case of Spain: Structural framework (low-tech industries, service economy)

Institutional framework: skills, innovation-business culture, human capital,

venture capital, administrative burden, …

Social perception

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Intellectual propertyIts role in growth, productivity and jobs in the (ICT-

based) knowledge society

Claudio Feijóo1

1Universidad Politécnica de Madrid, Spainclaudio@feijoo.net

Seminario Gestión de la Propiedad Industrial e Intelectual en el Sector TIC

Escuela de Organización Industrial

Madrid, 16 December 2009