The Fastest Growing Emerging Economies Are Also Those With The Weakest IP Laws

Economics

from the like-exactly-the-opposite-of-the-talking-points-no-one-believes-anyway dept

Every time the major players in the copyright industries kick off another push for more legislation, enforcement or protection, they make grandiose claims about how much IP-intensive industries contribute to the economy. “Millions of jobs generating billions in revenue, a small portion of it taxable!” they shout proudly in the direction of the nearest legislator or ICE agent. If IP protection was weakened in the slightest, the nation's entire economy would likely collapse.

IP is innovation, according to these industries. Weak IP laws lead to weak economies. This entertainment industry trope, filled with questionable numbers, is used to justify the endless push for draconian IP enforcement and stiff legal and civil penalties for infringement. But evidence to the contrary continues to mount, punching holes in the IP industries' favorite narrative.

Kevin Smith, Duke University's Scholarly Communications Officer, came across two recent articles which, when combined, seem to draw exactly the opposite conclusion: strong IP laws may very well be detrimental to economic growth. (via The Digital Reader)

Yesterday, Reuters news service ran an article about a rating of eleven countries based on their enforcement of intellectual property rights. The index was prepared at the behest of the U.S. Chamber of Commerce by a group called The Global Intellectual Property Center, and it ranks the U.S. at the top of the list in terms of strong IP protection (23.73 points on a scale from 0 – 25). But what is interesting is who scored lowest (out of the eleven countries that were ranked). The four “worst” countries for providing the strong IP protection important to the Chamber of Commerce were the four countries known as BRIC — Brazil, India, Russia and China.

So what else do we know about these four nations? In fact, why were they originally grouped together under the acronym BRIC? The answer is that the term was coined because these four countries were the fastest growing emerging economies, showing growth rates between 5 and 9 percent in their gross domestic products (compared with US growth averaging 3.2 over the past 65 years). The source of these averages for the BRIC nations is this report from PriceWaterhouseCoopers, dated February 2012, which contains this conclusion: “We expect the BRIC economies to continue to drive world economic growth in 2012.”

So the four countries driving economic growth are also the four countries with the weakest IP protection regimes, amongst those 11 rated by the Chamber of Commerce report. Doesn’t the conclusion seem simple, that weaker IP enforcement is part of the picture for economic growth?

Now, Smith points out that this connection is nothing more than correlation, but a few conclusions can be drawn. A lack of solid IP protection does not necessarily doom economies to subpar performance and increasing IP protection does not necessarily lead to a robust economic future. IP industries have relied on the credulity of legislators to pass off the “stronger IP enforcement results in more innovation, jobs, etc.” argument, usually packaged with the “no copyright protection means no incentive to create” lie that conveniently ignores years and years of creation pre-copyright and thousands of new artists surfacing at a time when piracy is “rampant.”

There's tons of evidence that contradicts the rationale driving the “need” for more IP enforcement. Smith goes on to list a few examples of artists thriving with little or no protection, including “Nollywood,” Nigeria's film industry, which has exploded over the last 20 years despite truly rampant infringement, and K-pop star Psy, who's looking at $8 million earned without having to rely on the protections of copyright. So, as has been suggested here time and time again, the real “enemy” of innovation and creativity ISN'T piracy, it's the industries themselves.

[I]P protection is, at least a double edged sword. Piracy can reduce revenues, but it also helps to create distribution channels and grow markets. So creative industries seeking to grow in the digital economy need to do more than try, futilely, to eradicate piracy, they need to seek ways to shape their markets and their marketing to exploit the audiences that it can create.

“New business model,” anyone? This has been pointed out again and again. Attempting to defeat something that it at least partially beneficial is, at the very least, short-sighted. On a larger scale, battling piracy with enforcement and legislation rather than by increasing options and providing better services is more than short-sighted — it's dangerously self-destructive. There's very little evidence that enforcement efforts are making any real dent in file sharing — certainly nothing that would justify the time, money and effort expended.

Smith concludes his post with these thoughts:

So, slippery as such conclusions can be, I feel comfortable with these two assertions. First, creative people and creative industries can thrive without strong IP protections. In fact, if you are continually looking to the government to increase IP enforcement on your behalf, your industry is probably already in bad trouble. Second, it is perfectly possible to over-enforce IP rights to the point where creativity and economic growth are stifled. There is good evidence that the US has passed that point, and the example of the BRIC nations should suggest to us that we need to reverse our course.

At this point, the legacy industries are too firmly entrenched to expect any sort of nimble maneuvering or backtracking on existing IP laws. A suggestion for just such a reversal, briefly posted by the Republican Study Committee, met a swift, ignoble death at the hands of Hollywood's lobbyists, who also pressured its author, Derek Khanna, out of a job. No matter how much evidence contrary to the copyright industries' talking points is presented, the response is always the same: more enforcement, legislation and protection. It will take a severely weakened entertainment industry to give any quarter, but as long as its aims remain self-destructive, that day seems inevitable.

Filed Under: brazil, china, correlation, economics, growth, india, intellectual property, russia