Oxford Review of Economic Policy - recent issues

Intellectual property: the assessment

Siegel, D. S., Wright, M. — 2008-01-11

In recent years, there has been an increase in the commercialization of intellectual property (IP), via such mechanisms as patents, licences, copyrights, and trade marks. New institutions (e.g. science parks), as well as new organizational forms (e.g. research joint ventures), have emerged to facilitate the creation and commercialization of IP. Existing institutions, most notably universities, have become much more aggressive in protecting their IP and devising ways to generate additional revenue from their IP portfolios. These trends have important policy implications, which are addressed by the authors in this issue. We summarize their contributions and provide some context for assessing these salient matters.

The value of intellectual property rights to firms and society

Greenhalgh, C., Rogers, M. — 2008-01-11

Economists view intellectual property rights (IPRs) as policy tools for encouraging innovation, but they recognize that they can also inhibit competition. There are many types of IPRs and institutions concerned with their administration. We begin by outlining how these complex and varied rights are supposed to work and how they interact with other characteristics of firms and markets. We then survey the available literature on patents, trade marks, and copyright to assess the value of these IPRs to firms and the costs to firms of acquiring and defending their rights. The paper concludes with suggestions for topics requiring further research to inform public policy better.

Patents and patent policy

Hall, B. H. — 2008-01-11

A patent is the legal right of an inventor to exclude others from making or using a particular invention. This right is sometimes termed an ‘intellectual property right’ and is viewed as an incentive for innovation. This article surveys the evidence on patent effectiveness in encouraging innovation and reviews the current controversies in patent policy.

Per un pugno di dollari: a first look at the price elasticity of patents

de Rassenfosse, G., van Pottelsberghe de la Potterie, B. — 2008-01-16

This paper analyses the role of patent-filing fees requested by the member states of the European Patent Convention (EPC). We provide first empirical evidence showing that the fee elasticity of the demand for priority applications is negative and significant. Given the strong variation in absolute fees and in fees per capita across countries, this result indicates a suboptimal treatment of inventors across European countries and suggests that fees should be considered as an integral part of an intellectual property policy, especially in the current context of worrying backlogs. In addition, we show that the transfer rate of domestic priority filings to the European Patent Office (EPO) increases with the duration of membership to the EPO and the GDP per capita of a country, suggesting that member states experience a learning curve within the EPC. The high heterogeneity in the transfer rates casts some doubts on the practice that consists in relying on filings at the EPO or at the United States Patent and Trademark Office to assess the innovative performance of countries.

Why develop open-source software? The role of non-pecuniary benefits, monetary rewards, and open-source licence type

Sauer, R. M. — 2008-01-11

A review of the basic theory of optimal open-source software contributions points to three key factors affecting the decision to contribute to the open-source development process: non-pecuniary benefits, future expected monetary returns, and open-source licence type. This paper argues that existing large-scale software developer surveys are inadequate for measuring the relative importance of these three factors. Previous econometric studies that collect their own unique datasets also fall short because they generally measure the importance of only one supply factor in isolation. To fill the gap, I specify an estimable dynamic programming model of joint labour supply and open-source participation decisions that can provide empirical estimates of relative importance within a single unified framework of optimal decision-making.

University licensing

Thursby, J. G., Thursby, M. C. — 2008-01-11

Licensing of university inventions to industry has experienced rapid, recent growth. This growth is cited as evidence of university success in technology transfer and it suggests an increasing importance of universities to innovation systems. Concerns have been raised that universities are moving towards applied research and away from fundamental research in efforts to capture licensing income. However, figures on growth in licensing perhaps paint a misleading picture, given the substantial variation in licensing success across universities, scientific fields, and technologies. The paper is organized around the following questions. What is the rationale behind university patenting and licensing? How embryonic are university inventions and how often is further development necessary? What is the record on exclusive versus non-exclusive licensing? What is the record on licensing revenue? What are university licensing goals? What is the role of faculty after a licence is signed? Have faculty been diverted from their traditional role in research?

Technology transfer offices and commercialization of university intellectual property: performance and policy implications

Siegel, D. S., Veugelers, R., Wright, M. — 2008-01-11

The recent increase in the rate of commercialization of intellectual property at US and European universities has important performance and policy implications. We review recent studies of the antecedents and consequences of these activities and then draw some lessons learned for policy-makers. A key conclusion is that universities and regions must formulate and implement coherent and feasible technology transfer/commercialization strategies.

The economics of university research parks

Link, A. N., Scott, J. T. — 2008-01-11

In recent years, there has been a substantial increase in public and private investment in university research parks (URPs). URPs are important as an infrastructural mechanism for the transfer of academic research findings, as a source of knowledge spillovers, and as a catalyst for national and regional economic growth. We present international evidence on the growth of URPs, review the academic literature on URPs, and outline an agenda for additional theoretical and empirical research on this topic.

Multilateral trade cooperation: what next?

Hoekman, B., Vines, D. — 2007-10-26

This paper first briefly describes the role of the WTO and its history. It then lays out a simple bargaining model of international negotiations, which can be used for understanding the Doha Round of talks. Using this, we distil what we regard as the major potential explanations for the difficulties in these talks. We then discuss a number of the systemic questions that confront WTO members. We suggest that the WTO should concentrate on market access, rather than on promoting a development agenda or on further expanding its coverage to deal with regulatory issues or with other domestic policies.

An enduring need: multilateralism in the twenty-first century

Krueger, A. — 2007-10-26

That the global economy has been hugely successful over the past 50 years is unquestionable. A major underpinning of that success has been the open multilateral system, which has enabled the emergence of a truly international financial system, reciprocal reduction of trade barriers, and the emergence of many previously poor countries into the status of ‘emerging markets’ or even ‘developed’. The open multilateral system, however, is increasingly under-appreciated and taken for granted. Preferential trading arrangements have proliferated, and with them the possibility of discriminatory arrangements for capital flows. The absence of an international regime for capital flows permits this development and poses a threat to the system, as do all of the issues on which countries' governments assert ‘their’ interests, and ignore their interests in the overall health of the system. It is to be hoped that the benefits of multilateralism are more greatly appreciated, and that the current trend toward increasing regionalism and departures from the post-war system is reversed.

Why is it so difficult? Trade liberalization under the Doha Agenda

Martin, W., Messerlin, P. — 2007-10-26

Many explanations have been offered for the current difficulties of the World Trade Organization (WTO). In fact, the system appears to have managed many of these challenges reasonably well, including the increase in the number of members, its ‘mediaeval’ decision-making procedures, the changing geopolitical environment, the rapid growth of preferential trade arrangements (PTAs), the complexity of its agreements, and concerns about erosion of unilateral preferences. By contrast, the near-exhaustion of the traditional fuel of industrial-country non-agricultural tariffs, the increasing importance of non-trade concerns, and incomplete adjustment to a new, multi-polar negotiating system appear to be important factors requiring further examination.

The political economy of services trade liberalization: a case for international regulatory cooperation?

Hoekman, B., Mattoo, A., Sapir, A. — 2007-10-26

Little progress has been made since the creation of the WTO on expanding and deepening the coverage of services liberalization commitments. This paper identifies and discusses five hypotheses that may explain the absence of dynamism: (i) technological changes allowing ever more services to be traded cross-border unaffected by policy; (ii) strong incentives to pursue liberalization on an autonomous basis (unilaterally); (iii) perceptions that bilateral or regional cooperation are a good substitute for the WTO; (iv) standard political-economy factors, such as adjustment costs and resistance by incumbents to erosion of rents; and (v) concerns that the WTO will affect the ability of regulators to enforce national norms. We argue that all of these explanations play a role, and that some of these factors significantly impede the scope for reciprocal exchanges of ‘concessions’—the engine of WTO negotiations.

Five hypotheses concerning the fate of the Singapore issues in the Doha Round

Evenett, S. J. — 2007-10-26

At the Cancún Ministerial Conference, the members of the World Trade Organization (WTO) disagreed on whether to launch negotiations on multilateral disciplines concerning the four areas of government policy collectively known as the ‘Singapore issues’. This amounted to a decision not to expand the WTO's boundaries along these dimensions. In this paper, five hypotheses concerning the treatment of the Singapore issues by the WTO's membership are described and assessed. The implications of this assessment for the likelihood that, at some future date, similar proposals can be successfully advanced in the multilateral trade arena are also discussed.

Trade adjustment in the WTO system: are more safeguards the answer?

Bown, C. P., McCulloch, R. — 2007-10-26

For countries to engage successfully in the international trading system, their industries, firms, and workers must respond continually to new conditions of competition. The continuing need to adjust arises both from policy changes approved in multilateral negotiations—e.g. implementation of trade liberalization commitments, preference erosion, or adverse terms-of-trade consequences of export subsidy elimination—and from ongoing changes in competitive pressures inherent in a liberal trading system—e.g. effects on comparative advantage of changes in technology or factor supplies. But the political response to a situation calling for adjustment is often a call for ‘safeguards’—whether as an ex ante provision in negotiated agreements or as an ex post measure once the agreement has been signed and the reality of new conditions takes shape. This paper examines the range of adjustment problems confronting the current and future international trading system, the economic arguments for intervention to deal with these problems, the adjustment environment as set out in the current World Trade Organization (WTO) Agreements, and proposals for reform. While the adjustment problems we discuss apply to both rich and poor WTO member countries, we highlight the issues of adjustment especially relevant for developing countries.

Implementation and imbalance: dealing with hangover from the Uruguay Round

Finger, J. M. — 2007-10-26

The Uruguay Round agreements impose bound obligations to implement, but provide only unbound promises of assistance—is there a legal solution within the WTO legal system, i.e. can implementation assistance be made a legal obligation? The author concludes that the Doha negotiations on trade facilitation and on aid for trade demonstrate that such a legal arrangement cannot be constructed. This is not, however, a problem; the international community has provided extensive trade-related assistance through bilateral and multilateral development agencies. Regarding the overall Uruguay Round imbalance (developing countries gave more than they got), failure of the international community to acknowledge that the imbalance stems in major part from the WTO agreement on intellectual property (TRIPS) has retarded a general making-up.

Coherence and the WTO

Winters, L. A. — 2007-10-26

Coherence between the WTO and the Bretton Woods Institutions (a formal WTO objective) has achieved some minor goals but has been expensive in terms of direct costs and inefficiencies in policy-making and policy debate. The so-called Integrated Framework has achieved relatively little and aid for trade has yet to be fully established. There is little role for the WTO in development and aid policy other than its traditional job of facilitating trade growth, and so its role in aid-for-trade is unclear. Coherence, especially when interpreted as allowing developing countries to avoid trade liberalization in the name of development, has confused and weakened the Doha Round of WTO negotiations.

Aid and trade

Suwa-Eisenmann, A., Verdier, T. — 2007-10-26

This paper surveys the recent theoretical and empirical literature that explores the relations between aid and trade and asks about the complementarity or substitution effects at work. We distinguish between the effects of aid on trade flows and on trade policies, of the donor as well as the recipient countries. Special focus is given on trade facilitation, or ‘aid for trade’.

Regional free-trade areas: sorting out the tangled spaghetti

Garnaut, R., Vines, D. — 2007-10-26

As a result of the difficulties in negotiating the liberalization of trade globally, countries seek liberalization among smaller groups. We describe open regionalism as one such attempt to do this, and show why after a decade of success it ran into the ground as a strategy. The formation of discriminatory regional free-trade areas (FTAs) is sometimes seen as another response to this problem. This paper point outs what is wrong with this response—that it distorts trade patterns and thereby sets up an unpleasant prisoner's dilemma—and suggests some ways forward. We propose the formation of open trading arrangements (OTAs) and the establishment of a Trade Transparency Commission in each country that is participating in an OTA. We also suggest global regulation of trade diversions caused by all FTAs, whether OTAs or not. Ultimately, the return to health of the global trading system will require expanded understanding of the basic insight of economics, that liberalization enhances the welfare of citizens of the liberalizing country.

India's development in the era of growth

Bhaskar, V., Gupta, B. — 2007-09-19

The recent growth pattern of India is set in the context of the parallel experience of China, the experience of poverty reduction is reviewed, and a number of papers illuminating India's development are introduced.

The pattern and causes of economic growth in India

Basu, K., Maertens, A. — 2007-09-19

This paper presents the broad macro parameters of the growth of the Indian economy since the nation's independence and a cross-country evaluation of where India stands, drawing out the patterns discernible in these aggregative statistics. The paper gives an overview of the on-going debate on the components of the Indian growth and the relative importance of the different policies in the 1980s and 1990s. It contributes to this debate by identifying the landmark years, and analysing the politics behind some of the economics. The paper also analyses the factors behind the changes in India's savings rate and the relation between growth and development, on the one hand, and the nature of labour market regulation, on the other.

The progress of school education in India

Kingdon, G. G. — 2007-09-19

This paper provides an overview of school education in India. First, it places India's educational achievements in international perspective, particularly against countries with which it is now increasingly compared, especially China. Second, the paper examines schooling access in terms of enrolment and school attendance rates, and schooling quality in terms of literacy rates, learning achievement levels, school resources, and teacher inputs. Third, the paper investigates the role of private schooling in India, examining the extent of growth of private schooling and surveying evidence on the relative effectiveness and unit costs of private and public schools. Last, the paper discusses some major public education initiatives. The concluding section suggests a future research agenda and appeals for rigorous evaluation of the impacts and costs of the numerous existing educational interventions, in order to learn about their relative cost-effectiveness for evidence-based policy-making.

The evolution of institutions in India and its relationship with economic growth

Subramanian, A. — 2007-09-19

This paper examines the evolution in a few public institutions over time in India. It presents three types of evidence: on institutional outcomes (such as losses in power generation, backlogs in disposal of court cases); on perceptions-based measures of governance, some going back to the 1960s; and, finally, on customs administration and whether it has been more effective at detecting evasion over time. All the evidence suggests that institutional quality has not improved over time. It then addresses the two-way relationship between growth and institutions in terms of two apparent paradoxes. The first is why growth has turned around so dramatically in India despite the relatively limited nature of reforms, especially compared with other countries. The second paradox is why, despite nearly 30 years of rapid growth, institutions have not improved. The paper offers some explanations that might help explain these paradoxes.

India's missing girls: biology, customs, and economic development

Bhaskar, V., Gupta, B. — 2007-09-19

We review the evidence on the sex ratio among children below the age of six. International evidence shows that the sex ratio at birth is slightly biased towards boys, but boys suffer greater mortality, a pattern consistent with Darwinian evolution. With economic development, the male bias in the child sex ratio increases. South and East India show levels and trends in the child sex ratio that are consistent with this evidence. However, unbalanced sex ratios in the northern and western states since the first censuses indicate discrimination against girls. Technological developments permitting sex-selective abortions have seriously aggravated the imbalances in these states. Economic modelling of parental choice regarding a child's gender suggests that gender imbalances may be consistent with individual maximization and marriage-market equilibrium. Nevertheless, these choices have adverse welfare consequences, which will be aggravated by the decline in population growth and consequent relaxation of the ‘marriage squeeze’.

A delayed revolution: environment and agrarian change in India

Roy, T. — 2007-09-19

Slow growth of agricultural income has contributed to poor economic growth and poverty in India in modern times. The condition was weakened by Green Revolutions in the last third of the twentieth century. Conventional accounts attribute the stagnation to institutions created during colonial rule in India. This article suggests, instead, that it derived from an environmental constraint. The Green Revolutions succeeded partly because state aid enabled peasants to overcome the constraint in some regions.

Land reform and agricultural productivity in India: a review of the evidence

Ghatak, M., Roy, S. — 2007-09-19

In this paper we review as well as contribute to the empirical literature on the impact of land reform on agricultural productivity in India. We find that, overall for all states, land-reform legislation had a negative and significant effect on agricultural productivity. However, this hides considerable variation across types of land reform, as well as variation across states. Decomposing by type of land reform, the main driver for this negative effect seems to be land-ceiling legislation. In contrast, the effect of tenancy reform, averaged across all states, is insignificant. There seems to be a wide range of state-specific effects, which suggests that focusing on average treatment effects can hide a considerable amount of heterogeneity. In particular, allowing a separate slope for West Bengal, one of the few states that implemented tenancy laws rigorously, we find that land reform had a marginal positive effect relative to the rest of India.

The changing pattern of foreign trade specialization in Indian manufacturing

Alessandrini, M., Fattouh, B., Scaramozzino, P. — 2007-09-19

This paper examines the pattern of international trade specialization in Indian manufacturing since the mid-1980s by using data on trade flows. Low-technology sectors still dominate the categories for which India exhibits the largest degree of trade specialization. By contrast, high-technology sectors are prevalent among the categories for which India is import-dependent. Significantly, India has experienced an improvement in the degree of specialization in some of the most dynamic sectors of world trade.

Capital inflows, financial repression, and macroeconomic policy in India since the reforms

Sen, P. — 2007-09-19

Since the early 1990s the Indian economy has seen a considerable relaxation of controls, as a consequence of which it has witnessed unprecedented growth. This is especially remarkable in the external sector. In this paper I evaluate the progress made on the macroeconomic front and address the possibility of opening up the capital account of the balance of payments. I show that given the weakness in the financial sector and the government finances, it may be dangerous to speed up the process of opening up the capital account further.