Innovation

GLOBAL INVESTOR FOCUS Innovation — 12
Photo: Thomas Eugster
Giovanni Dosi is Professor of Economics
at the Sant’Anna School of Advanced Studies,
Pisa. He is author and editor of works on
economic innovation, industrial economics,
evolutionary theory and organizational
studies. He is Codirector of task forces on
industrial policy and intellectual property
rights at Columbia University and is a consultant
for the OECD, UNCTAD and other bodies.
So far ICT has made very little difference to consumption patterns.
The invention of the cell phone and even the PC have not made as
much impact so far as the introduction of the car, washing machine
or television did in the past. This view may differ from that of some,
but right through history, people have tended to praise the innovations
of their time at the expense of those of preceding eras. This
happened in the Industrial Revolution and again in the so-called
second Industrial Revolution.
ICT may speed up and add value to industrial processes, but it
doesn’t completely replace them. So, while perhaps 95% of the development
of a new aircraft may take place on a computer, it cannot
be commercialized without intensive testing in practice – and it is
these actual tests that will establish whether a project is feasible or
not.
Also, the effects of ICT have not always been as spectacular as
hoped for. The pharmaceutical industry, for example, has made
huge progress in areas such as genetics, where ICT has played a
pivotal role. But such advances have not necessarily paved the way
for “silver bullet” cures for diseases in the way that was being predicted
20 years ago. Instead of simplifying the path to a cure, the
greater knowledge brought via ICT can reveal a much more complex
picture than foreseen. In some cases, we now know that perhaps
as many as 1,000 genes may act on a disease, particularly generative
and systemic diseases, and this unexpected complexity means
the pace of advance in some areas of life sciences has been retarded,
in spite of the ICT tools at scientists’ disposal.
As more corporate resources go into patenting innovations, or
fighting claims of patent infringement, is there a risk of creating a
legal straightjacket restricting innovation? There has been a proliferation
in the registration of patents, which is not necessarily helpful
to innovators. A process similar to that at work in an arms race
seems to be going on, with the attitude that if your rivals are patenting
everything, then so must you. This is often done just to stake
out territory in a technological field, or perhaps with a view to using
the patent as a bargaining chip – even if nothing worthwhile is likely
to come out of the patent long-term. It has been estimated that
the cost of patent litigation in the US now accounts for up to onethird
of the country’s research and development budget.
The outcome of all this may be merely frivolous, such as the US
patent which describes a method of exercising a cat. But it may
also be harmful, as can be the case in developing countries. One
has to ask whether the aggressiveness with which intellectual property
rights (IPRs) are now being enforced has the effect of accelerating
or obstructing the process of global innovation. The enforcement
of IPRs is generally in the interest of countries and companies
on the technological frontier. On the other side of the equation are
the “catching-up” countries that tend to oppose sweeping enforcement
of IPRs – often with good reason. In some areas, IPRs tend
to restrict imitation and the diffusion of technological knowledge,
which leads to major difficulties in catching-up countries as they
race to improve their position. In the past, these countries used to
imitate goods and processes from elsewhere and then go on to
invent their own innovative products on the basis of what they had
learned. International negotiations to bring about wide-scale symmetric
waivers for IPRs in developing countries to try to ease the difficulties
in catching up could prove highly beneficial in this regard.
In the case of developed countries, we can, at least, dispel some
myths. For example, IPRs are not as important as some believe. Of
more importance is the governance of the institutions that preside