By Paul Akiwumi, Director, Division for Africa, LDCs and Special Programmes, UNCTAD
In an increasingly complex global economy, knowledge can be a silver bullet. Technology-driven innovation creates new products, tasks, professions, and economic activities. However, for developing countries, capturing the gains of innovation may not be automatic.
The Oslo Manual defines innovation as the implementation of a new or significantly improved product (good or service) or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations. While this definition may apply in mature economies, it may not be suited to the realities of least developed countries (LDCs). There, innovation occurs mostly through small, gradual improvements to existing products, services or processes, and it mostly happens in small and medium-sized enterprises. Also, a significant share of domestic innovation happens in the informal sector.
The 1.1 billion people who inhabit the 45 LDCs live in countries characterized by a high degree of heterogeneity (see Table 1). Within the group, those 15 countries that have been recommended by the United Nations Committee for Development Policy (CDP) for graduation have an average GDP and GNI per capita more than double that of the remaining 30 LDCs. Extreme poverty is also likely to be concentrated in the latter group.
Table 1. KEY INDICATORS
Leveraging intellectual property rights for development
Intellectual property rights (IPRs) have assumed a central role in shaping the global economic and political landscape. For vulnerable developing countries, navigating the complex terrain of IPRs and translating their potential into a tool for sustainable development can be a daunting task. A recent UNCTAD study examines the pivotal role that IPRs can play in in LDCs. It sheds light on how LDCs can leverage IPRs to meet their unique socioeconomic development needs. By focusing on key sectors for productive development such as mining, pharmaceuticals, tourism, and finance, the study illustrates how IPRs can act as catalysts for growth and transformation.
A notable example of IPR success via the application of trademarks is the Laotian enterprise, the Vientiane Steel Industry Co., Ltd. (VSI). The company produces specialised materials including “forming steel” (a kind of high strength steel) and roofing tiles, which bear the trademark “Lao Tile VTP Twin Elephants”. The trademark is registered with the Lao Division of Intellectual Property. The wide domestic brand recognition and reputation for quality has enabled the VSI Group to supply nearly 60% of local demand. As the only Laotian steel company producing “Grade A” steel, VSI Group’s product was further recognised with ISO-9001 certification.
Although Geographical Indication (GI) protection is nascent, especially in African LDCs, the number of filings is growing. This is often due to countries’ weak institutional structures and regulatory frameworks as well as the absence of enforcement and monitoring mechanisms for GI protection. This has been the case of the GI for Madd de Casamance (a local berry) in Senegal renowned for its flavour and medicinal properties. Throughout their GI registration process, local producers, mostly women and youth, have ensured that their harvesting and processing practices are governed by ecosystem sustainability considerations.
For LDCs, the transition towards “developing country” status is riddled with challenges. In most low-income developing countries, economic diversification involves emulating industries in more advanced economies. This is a steady progression that builds on existing industries; thus, it is ‘path dependent.’ If a country already has the capacity to manufacture medium and high technology products, it is in a stronger position to diversify. Ratifying and implementing international IP treaties, engaging with regional IP protection mechanisms, and supporting domestic policies that facilitate the development and protection of innovative practices and products – actions that would qualify for various forms of IPRs – can pave the way for a brighter future in LDCs.
The need for technology-skills development
To undertake IP-driven innovation, a certain level of education, training and access to intermediate products and services are required. Only between 1% and 10% of total students who completed a short tertiary cycle in LDCs between 2015 and 2022 were women. Alone, these percentages highlight the crushing gender divide in LDCs. Moreover, an average of 22% of Government expenditure in education was invested in tertiary education in LDCs during the same period.
Moreover, low levels of awareness, limited use of information and communication technologies (ICTs), high fees, inadequate regulatory frameworks, and a lack of specialised skills within IP offices help explain the low number of IPR applications in LDCs. The above limitations also contribute to LDCs’ low capability to tackle IP infringement and violations.
On average, LDCs have the lowest level of productive capacities, as indicated by their score on the overall Productive Capacities Index (PCI) (31 vs. 46.8 for other developing countries) and their low rating on the Frontier Technology Readiness Index (FTRI) (0.19 compared to a world average of 0.5). Moreover, most LDCs are at the bottom of the ranks of the Global Innovation Index. Unsurprisingly, those 15 LDCs set for graduation had a higher level of productive capacity (with a PCI score of 39.5 vs 26.8) and a higher number of IP filings (78.6 vs. 46.8 as an average number of patents or 3 447 vs. 2 036 as average number of trademarks filed) than the 30 countries remaining in the LDC category during the period 2017-2021.
Tailoring IP protection to real economic conditions in least developed countries
The development journey of LDCs is inexorably linked to their ability to adapt, innovate, and harness their intellectual assets. Countries need to craft IPR strategies in line with local conditions, nurturing home-grown talents and fostering a climate of innovation. Rather than simply importing foreign IPRs, LDCs should be encouraged to focus on quality over quantity, emphasising “better” rather than “more” patents. When leveraged appropriately, in a context of complementary sectoral, financial, investment, and industrial policies, IPRs can play a critical role in steering LDCs towards sustainable development and prosperity. Their potential should not be dismissed.