The Economic Role of Intellectual Property in the New Global Economy Essay Sample

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            “(I)intellectual property consists of physical manifestation of original thought in compliance with statutes, specifically patent, copyright, or trademark statues.”  (Wagman and Scofield 1999) Intellectual property , in effect, is a company’s competitive edge in the global market place.  It is the product and service that a company sells and profits from in the global economic.  Intellectual property can therefore be thought of as an economic good.

Doing Business in the New Global Economy

            The United States has been fortunate to become a global economic leader.  Social and political factors, abundant natural resources, and a highly educated work force have all contributed to the United States’ global economic success.  One factor has allowed the U.S. to thrive in the global economy, that is technology.  Production assembly lines, electricity, and computer software and hardware technologies are some of the goods and services that U.S. companies have contributed to the global economy.  In 2005, the United States exported $900 billion in goods, and in 2004 exported $323 billion in services (International Trade and America’s Place in the Global Economy 2007) Intellectual property provides the building blocks for the technologies that led to this participation in the global economy.   A country’s ability to derive income from export of goods and services defines the role of intellectual property in the global economy.  Since intellectual property plays an integral roll in the global economy, what must countries do to protect their intellectual property and, as a result, their position in the new global economy?

Intellectual Property as an Economic Good

            Personal property is tangible and can be simply defined by possession.  Intellectual property, on the other hand, is intangible and is defined by complex trademark, patent, and copyright laws.  These laws define intellectual property in terms of infringement, barriers to infringement, and remedies for infringement.  These laws are generally set and enforced by individual countries, and applied to businesses within that individual country.  When a company does business outside the borders of a particular country, intellectual property rights may not be protected by law.  Intellectual property law must account for changes in political environment and changes in technology that lead to changes in business and industrial environments.

            Consider the impact on the music industry.  Composers and musicians profit when their lyrics and musical arrangements are recorded, sold, and they receive royalties.  Poetic words and finely arranged musical notes are pieces of intellectual property that turn into economic goods.  The internet and television allow artists to sell their music in the global economy.  Modern technology allows consumers to record, download, and reproduce music, both audio and video, which previously required expressed and written permission.  Additionally, consumers in countries that have few copyright laws can use the internet to access music from countries that have complex and highly enforced copyright laws.  These countries, however, cannot enforce those laws across national borders.  Each unauthorized reproduction amounts to a loss of royalties.  Extended industry wide, this constitutes a loss of income across an entire industry.  This sets an entire industry at an economic disadvantage.  When several industries within one country suffer this technology induced disadvantage, the entire country is at an economic disadvantage within the greater global economy.

            Intellectual property law must seek to keep pace with technology.  In so doing, these laws protect the economic interests of companies and countries.  Technological advances facilitate a growing global free market economy.  However, the global economic community must do more to protect the economic rights of owners of intellectual properties that contribute to the global economy.

Protecting Intellectual Property Rights in a Global Environment

            Developing countries must pass trademark, patent, and copyright laws that encourage developed nations to share technologies that can be used to enhance the economies in developing countries.  “One of the issues facing technology companies today is how to protect their IP as they expand into new markets in countries with emerging and burgeoning economies when those countries have not yet enacted satisfactory laws to protect intellectual property or where the enforcement of the intellectual property laws is not realistic. The problem, of course, is that intellectual property laws are limited by the borders of the country that enacts them.”  (Hemminger 2007)  For example, in absence of a music and movie recording industry, a developing nation can pave the road for an entertainment industry by protecting the rights of artists that import music and movies to developing nations, through paid downloads and the establishment of movie theaters.

            One country, Turkey, has made recent advancements in the protection and enforcement of intellectual property rights.  Since 2005, Turkey has passed numerous laws and formed various consultative and enforcement boards to deal with domestic and international patent rights.  On the enforcement end, Turkey has developed  five criminal courts  and five civil courts that deal specifically with intellectual property cases.  (Dereligil 2006)

            Companies must also take a proactive role in protecting the economic value of their intellectual property by implementing sound trade and marketing practices in light of and in spite of existing trade, patent, and copyright laws.  The intellectual capital management strategy (ICMS) model of the Delphi Corporation (Brown, Chan, and Jaganathan 2005) provides a basis for companies to build their own internal programs.  The guidelines include ideas such as employee development and retention programs that facilitate maintenance of employee innovations as intellectual property.  It also suggests the use and enforcement of contracts with non-compete clauses to maintain a company’s competitive advantage among employees, suppliers, distributors, and customers.

            Legal practitioners must be diligent in developing intellectual property practice as a discipline.  According to a 1991 MarketWatch report on Managing Intellectual Property in a Global Economy sponsored an educational conference focusing on topics such as “licensing software overseas, dealing with key employees from the outset and when they depart, handling potential conflicts of interest, due diligence and technical assistance agreements, unique problems in dealing with countries with developing economies, and protecting and managing proprietary rights in liquidation.”


            Intellectual Property is an economic good.  Owners derive an economic benefit from the transformation intellectual property into technologies that facilitate the sale of goods and services in the global economic market.  When intellectual property is characterized by the ideas and innovations of individuals, employment and entrepreneurship opportunities are created.  When companies sell goods and services across international borders, opportunities to develop new industries and enhance existing industries open up in both developed nations and in developing economies.  When countries develop laws, courts, and legal practitioners that deal specifically with intellectual property rights enforcement, companies are more likely to introduce their products and technologies into the global economy.  The economic benefit to countries is increased Gross Domestic Product (GDP) and lower trade deficits.


Brown, A J, Osborn, T., Chan, J M, & Jaganathan, V. (Nov-Dec 2005). Managing intellectual capital: sustaining the global competitive edge provided by your IC depends on developing and implementing an integrated business strategy. Research-Technology Management, 48, 6. p.34(8). Retrieved October 06, 2008, from General OneFile via Gale:

Dereligil, E. (Feb 2006). Highlights of 2005. Managing Intellectual Property, 156. p.140(2). Retrieved October 06, 2008, from General OneFile via Gale:

Hemminger, S D (April 2007). Section 337 of the Tariff Act: global IP protection in our global economy?. Intellectual Property & Technology Law Journal, 19, 4. p.1(4). Retrieved October 06, 2008, from General OneFile via Gale:

International Trade and America’s Place in the Global Economy. (2007). In Kim Masters Evans American Economy, The(2007 ed., ).Detroit: Thomson Gale. 11 Oct. 2008, Opposing Viewpoints Resource Center via Gale:

Proprietary rights experts will explore intellectual property management and protection at a conference to be held next year. (Dec 16, 1991). Software Industry Report, 23, n24. p.8(1). Retrieved October 06, 2008, from General OneFile via Gale:

Wagman, G R, & Scofield, S B (Summer 1999). The competitive advantage of intellectual property. SAM Advanced Management Journal, 64, 3. p.4(6). Retrieved October 06, 2008, from General OneFile via Gale:

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