Intellectual property rights are exclusive rights to the use of inventions such as new industrial products or manufacturing methods, artistic works such as literature or music, or plant varieties. Governments are responsible for granting the various forms of intellectual property rights including patents, copyrights, and plant breeders’ rights, to inventors and other creators. The granting of these exclusive rights is based on the logic that technical innovation and creative activities would be suppressed if the rights of inventors and others were not legally protected. For example, various costs are incurred in the invention of a new product, including the time, resources, and effort spent on developing ideas and carrying out experiments. If there were no prospect of recouping these development costs, the inventor might not take the trouble to carry the invention through. The patent system allows the inventor to earn monopolistic profits for a limited length of time, and thus raises the incentive for innovation.

Developing countries today are obliged to observe minimum standards concerning the protection of intellectual property rights as laid out in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement signed by members of the World Trade Organization (WTO). However, the enforcement of some types of intellectual property rights, such as pharmaceutical patents and plant breeders’ rights, is being treated cautiously in some countries. This is because in the short run, the exclusivity afforded by intellectual property rights can lead to higher prices for new products, making them less accessible to some members of society.

Historically, many countries including Japan have chosen the degree of protection for intellectual property rights according to their level of economic development. This has raised the question of whether the minimum standards specified by the TRIPS Agreement are at the optimal level for today’s developing countries.

While debate continues regarding the desirable level of protection, the actual impact of intellectual property rights in developing countries is not yet fully understood. For example, in the East Asian countries, including Japan, South Korea and Taiwan, where stunning economic growth was achieved, the imitation of Western technology undoubtedly made a contribution to technical progress. However, recent research has also shown that country-specific patent and utility model systems designed to promote incremental innovation by local enterprises have supported economic growth in these countries. On the other hand, research results show that stronger intellectual property rights encourage technology transfer from developed countries to developing countries.

Given the possibility of further reform in the global regime for intellectual property right protection, there is an urgent need to better understand the role of intellectual property rights within the process of economic development.