Conceptual Underpinnings of the WIPO Patent Report 2008, South Bulletin (Geneva), Issue 21 August 16, 2008.

16 August 2008, Issue 21

Geneva, Switzerland

against the IMF induced policies became widespread, and food riots spread from one country after another. The CSOs launched a global campaign against the BWIs under the clarion call “50 years are enough”.

That, however, did not end the domination of the BWIs. They decided that it was time to involve the civil society. The BWIs initiated the so-called PRSPs (Poverty Reduction Strategy Papers), and for awhile successfully marketed these as a “step in the right direc-tion” – i.e. passing the “ownership” of the SAPs to the countries themselves and invol-ving the CSOs -- presumptive representati-ves of “the grassroots”. With generous funds from Northern donors a large number of Southern CSOs got co-opted into what looked on the surface like “people’s involve-ment” in PRSPs, but what in fact was a do-nors/BWIs driven predetermined agenda.

Almost another decade went by, and the PRSPs also failed, their cover of “recipient country ownership” blown by the continuing failure to lift the masses in the so-called “rising tide of globalization”. Poverty remai-ned stubborn, despite IMF/WB anodyne figures that pretended that things were bet-ter. Unable to provide better strategies, the donors and the BWIs shifted the blame to Southern governments for enduring poverty. The macroeconomic policies, they argued, were not flawed; the problem lay with poor governance, corruption, and lack of Sou-thern government accountability to their populations. Between 1991 and 2004, the BWIs and donors shifted their aid conditio-nalities from purely macroeconomic policies to governance. According to figures compu-ted from World Bank data, the Financial and Private Sector Development conditionalities leveled out, but the conditionalities associa-ted with the Public Sector and Governance and Rule of Law steadily increased from 10 percent in 1996 to 45 percent in 2004.

EDITORIAL: Role of Civil Society in National Space Yash Tandon, Executive Director, South Centre

South Bulletin: Reflections and Foresights takes stock of ongo-ing debates on major global policy challenges and delivers regular flow of analysis and commentary to policymakers in the South.

Yash Tandon, Chief Editor

Vikas Nath, Associate Editor

EDITORIAL COMMITTEE

Aileen Kwa

Xuan Li

Vice Yu

Inside This Issue:

Editorial: Yash Tandon 1

Third High-level Forum on Aid Effectiveness: Issues of Concern Vicente Yu

2

Aid and National Devel-opment: Where is the African Strategy? Mammo Muchie

4

Measuring Innovation: Conceptual Underpin-nings of the WIPO Ptent Report 2008 Yogesh Pai

6

Boom, Bane or Bluster: Regional Blocs in Ques-tion Tess Cruz-del Rossario

8

Op-Ed: Xuan Li 12

Effective Coordination Works!

South Centre

10

South Centre is an Intergovernmental Think Tank of the Developing Countries

SOUTH BULLETIN Reflections and Foresights

For thirty years (from mid 1970s to the end of the last century) many governments in the South, especially in the low and middle-income countries, had surrendered their right to make macroeconomic policies over to the Bretton Woods Institutions (BWIs) -- the International Monetary Fund (IMF) and the World Bank (WB). The BWIs’ so-called Structural Adjustment Programmes (SAPs) advocated, among other things, free market liberalisation, fiscal austerity, privatisation and marketisation of essential social servi-ces such as health, education and water. The most potent tool for enforcing SAPs was the so-called “development aid”, or Official Development Assistance (ODA). Looking back it is truly amazing that even tiny amounts of ODAs with BWI conditionalities were able to tie up the entire national reve-nues of these countries and shape their “development” strategies. This is because the politicians and bureaucracies of these countries had internalized the “Washington Consensus”, the ideological bedrock of these policies. For this reason, none of these governments ever pointed out that the so-called “consensus” was never negotiated in any intergovernmental process, either in the United Nations, or even within the BWIs.

However, these policies were fundamentally flawed, as the wisdom of hindsight has shown. Presumed, among other things, to weed out inefficient industries in the South and make those left behind more competi-tive in a globalizing world, as argued by the BWIs, these policies led, instead, to rapid deindustrialisation of most of these coun-tries, especially in Africa and Latin America.

The civil society organisations (CSOs) in these countries were the first ones to raise the alarm. The effects of SAPs were disas-trous for especially the poorer sections of the populations. In the 1990s protests

(Continued on page 9)


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The Third High-Level Forum on Aid Effectiveness: Some Issues of Concern By Vicente Yu

The Third High-Level Forum on Aid Effectiveness (HLF-3) convened by the Organization for Economic Cooperation and Development (OECD) with other partners such as the World Bank will take place in Accra, Ghana, from 2-4 September 2008. The organizers have put together a document entitled the Accra Agenda for Action (AAA) that will be placed before the Ministers and agency heads participating in the HLF-3 for their adoption by consensus. The final draft of 25 July 2008 is available from the World Bank servers at: http://s i t e r e s o u r c e s . w o r l d b a n k . o r g / A C C R A E X T /Resources/4700790-1217425866038/AAAFinalDraft-25July2008.pdf

International discussions such as the HLF-3 relating to aid effectiveness are important elements in enhancing multilate-ral development cooperation, and definite-ly merit engagementby various develop-ment cooperation stakeholders. Adopting this approach, South Centre highlights some issues which in its analysis might militate against the HLF-3 becoming a ge-nuine deliberative forum.

The Process: Inadequate developing coun-tries representation

The process used for the drafting of the text of the AAA falls short of actually engen-dering genuine, full and transparent parti-cipation by developing countries in shaping and influencing the final text to be adopted by the participants to HLF-3. In this regard, the following points may be noted:

The Steering Committee for the Accra HLF, which is the body responsible for conceptualizing and prepa-ring for the HLF as well as for drafting the AAA, did not have adequate developing country representation. There are only four (4) developing countries represented in the Steering Committee. The other members of the Steering Committee include: the US, Canada, Japan, UK, European Commission, World Bank, OECD, UN Development Group, UNDP, and the African Development Bank.

The consultation process adopted by the Steering Committee did not envision actual intergovernmental negotiations on the AAA text (which should have been essential considering that the AAA is designed to affect governmental action on developmental cooperation). Instead, it involved a series of regional consultation meetings “designed to foster continued learning about aid effectiveness and elicit input into the de-velopment of the Third HLF.” These consultation meetings, together with other preparatory events, went in tandem with the preparation by the Steering Committee of the draft text of the AAA. With respect to the AAA consultation process, the Steering Committee agreed that it “will review and supervise

the elaboration of various consultative drafts with a view to reaching agreement by the Working Party in July 2008.”

The Steering Committee then formed the “Accra Consensus Group” that consists of “the SC [Steering Committee], the Ghanaian Chair of the Contact Group, three members of the partner country contact group (one each from Africa, Asia and the Latin America & Caribbean regions), and the DAC chair – for the purposes of the discussion of the AAA.” In no case did the process envisage the actual conduct of inter-governmental negotiations on the text of the AAA. This ef-fectively limits the extent to which developing countries ge-nerally are able to influence and shape the AAA text.

Furthermore, there was no clarity on how any comments from developing country participants and other stakeholders on the draft AAA text will be incorporated in any revisions the-reof. This meant that the selection of com-ments or textual suggestions to be incorpo-rated was left up to the Accra Consensus Group and, eventually, the Working Party. Those Accra HLF participants that were not members of the Steering Committee, the Accra Consensus Group, or the Working Party, may find it difficult to verify exactly how their comments and suggested text revisions, if any, were reflected in the AAA text and its revisions.

In short, the drafting process for the AAA text – i.e. the actual act of revising the text – was undertaken using exclusionary, clo-sed-group, and non-participatory modali-ties very similar to the “Green Room”-type

negotiating modalities in the WTO that have long been sco-red by developing countries and civil society as being non-transparent and as militating against the effective participa-tion of developing countries. That is, developing country participants in the Accra HLF may well be faced with a final AAA text in the drafing of which they, for the most part, were not afforded full opportunities to participate, or whose full implications they have had no time to analyse.

The Consensus Modality

The consensus modality to be used at HLF-3 for the adop-tion of the AAA text is that of negative consensus – similar to the consensus modality in the World Trade Organization (WTO). This means that in the absence of any objections, consensus is deemed to exist. It would require a positive act of objection by a participant for consensus to be dee-med as non-existing.

Adopting this consensus modality, in combination with ina-dequate representation of developing countries in the pro-

“...the drafting process of the AAA text… was undertaken using

exclusionary, closed-group and non-

participatory modali-ties similar to the WTO’s“ Green-

Room” type negotiat-ing modalities... ”


Page 3

cess, puts developing countries in a doubly disadvanta-geous situation. They will have to raise objection on a text which they did not fully participate in drafting, to ensure that [the final consensual position adequately reflects their concerns] a consensus is not achieved without taking their concerns into account.

Possibility of Rise of New Normative Standards and Condi-tionalities

The AAA is presented as a non-binding instrument agreed upon only by the HLF-3 participants. However, when taken together with the Paris Declaration, it may well give rise to new normative standards and conditionalities with respect to the delivery of aid by developed country donors. These could effectively require aid recipient developing countries to implement the terms of the AAA and the Paris Declara-tion even in those instances where such implementation might not be appropriate to their development needs and circumstances. This means that even as a “soft law” instru-ment, the AAA (and the Paris Declaration by extension) could have “hard law” implications for developing country recipients of developed country aid in the sense that re-ceipt of such aid may be made subject to conditions that the recipients will be required to comply with on pain of being disqualified from receiving such aid.

Short Window of Opportunity for Developing Countries to Intervene

The organizers have specified the 15th of August 2008 as the deadline for HLF-3 participants to submit their objec-tions to the draft AAA text. After that deadline, if no objec-tions to the text are received, then the text will be deemed to be agreed to by consensus ad referendum and that this text will then be officially submitted to the HLF-3 in Accra for formal approval by consensus. The South Centre notes that a flawed process in which the participants are not gi-ven adequate modalities to actually intervene and in-fluence the drafting process for the AAA is compounded by a timeframe that, for many developing country participants given their own resource constraints, is likely to be too short for adequate internal domestic consultations.

Specific Points of Concern

The South Centre notes the following points with respect to the substantive content of the final AAA text of 25 July 2008:

• An uncritical assumption that the Paris Declaration has provided and continues to provide the best framework for improving aid effectiveness;

• A continued focus on conditionality-based aid delivery approaches;

• A higher level of actions and commitments to be un-dertaken by developing country aid recipients as compared to developed country aid providers, thereby continuing the

prescriptive approach to aid-promoted development policy approaches that have in the past generally not resulted in improved development outcomes for most developing country aid recipients;

• The draft does not make any attempt to put measurable targets to monitor the performance of donor countries to im-prove aid effectiveness on the basis of whether the recipient countries’ development objectives are being met;

• Not surprisingly given its provenance, the final draft fol-lows very closely the conceptual framework and approach to aid – including the use of policy reforms and policy conditions as the bases for the provision of aid – that are used by the World Bank and developed countries; and

• While the draft does use a lot of politically correct terms such as “country ownership” with respect to aid, but in inter-preting their usage, it is evident that the AAA aims to elicit the participation of developing countries within the framework and the norms set by developed country donors and will the-refore end up strengthening the OECD-DAC framework and its associated governance structure. In fact, the AAA draft does not suggest any inherent change in the governance structure which continues to be lopsided and donor-driven and far-removed from the “Ownership in Practice” approach favoured by aid recipient developing countries.

In Conclusion

Discussions on the text of the AAA which is being tabled for adoption by consensus at HLF-3 in Accra have been made contingent upon a framework of norms set out by developing country donors- the Paris Declaration. Devoid of any sugges-tions aimed at reforming the governance structure of the in-ternational aid system, it risks perpetuation of the dominant OECD-DAC position and associated interests and agendas.

While in essence a non-binding instrument, when taken toge-ther with the Paris Declaration, ithe AAA may well give rise to new normative standards and conditionalities with respect to the delivery of aid by donors. These could effectively require aid recipient developing countries to implement the terms of the AAA and the Paris Declaration even in those instances where such implementation might not be appropriate to their development needs and circumstances.

For detailed assessment, read South Centre Comments on the 3rd High Level Forum on Aid Effectiveness' Final Consulta-tive Draft of 25th July of AAA available from:

h t t p : / / w w w . s o u t h c e n t r e . o r g / i n d e x . p h p ?option=com_content&task=view&id=676&Itemid=1

Vice Yu is the Coordinator of the Global Governance for Devel-opment Programme at South Centre, Geneva.

He can be contacted at: [email protected]

producers with users, users with other users in Africa and for Africa. This is both desirable and possible and knowledge of how to do it- know-how- can be cultivated so that the conti-nent emerges fully as a region free from the ‘donorship’ gaze it suffers from so cruelly at the moment under the enormous burden of a crippling fragmentation and dependency myopia.

It is no exaggeration to state that African political and eco-nomic arrangements today are characterized by pervasive internal and schizophrenic disconnections, mismatches, frag-mentations and external dependence. Nearly 70 % of Africa’s overall population lives in subsistence and primary resource and agrarian condition. Where a region has the overwhelm-ing portion of its production as agricultural, that region in-variably remains vulnerable even in being able to feed itself.

Africa will remain permanently vulnerable unless it changes unequal primary agricul-ture and mineral exports for the production of knowledge, technology and innovation value added manufactured elsewhere. African countries produce similar primary products for the same market and com-pete against each other thus accentuating and deepening their fragmentation. A key example is the horticulture produced by many East African countries today!

Africa faces a true dilemma: if it is able to insulate itself from the world economy, it can incur possible welfare, income and knowledge losses. If it continues to inte-grate as it does now based on current

dominant patterns of relating on the basis of primary com-modity transactions with the world economy, it faces contin-ued economic dependence and fragmentation and lack of structural transformation of its fundamental economic, social and knowledge infrastructure.

Africa’s current pattern of insertion in the world economy comes at the cost of fragmenting the African economic, knowledge and political space. It appears the continued cost of fragmentation is supposed to be offset by Africa being in the international aid system. Whether African fragmentation can be offset by dependence on aid or national development should be a genuine issue for deep reflection and foresight for the AU and others with broad commitment to African free-dom and unity.

Where is the African Strategy?

An African national project is necessary for launching the infrastructure for a comprehensive structural transformation of African economy, state, society, communities and people. What seems lacking is exactly what is most needed: an Afri-can national project and national spirit first and foremost to anchor the evolution and dynamics of an African strategy!


“The elevation of an agricultural people to the condition of countries at once agricultural, manufacturing and commer-cial, can only be accompanied under the law of free trade, when the various nations engaged at the time of manufac-turing industry shall be in the same degree of progress and civilization; when they shall place no obstacle in the way of the economical development of each other, and not impede their respective progress by war or adverse commercial legislation.” - Friedrich List, in the National System of Politi-cal Economy.

It is often said that when Africans argue for an integrated national African economy, they are self-indulgently enter-taining nothing but a futile illusion. They claim that to argue that Africa must unite economically, ‘knowledge-ically’, po-litically, and ’society-ically’ is to day-dream. They assert that Africa does not exist in anything, form or shape other than as a geographical accident.

Of course, they would hardly suggest the same of the USA, for example, where 'the tribes of the whole world’, and people have united under one constitution and national flag, and right now seemingly poised to elect an African –American with a father from Kenya! To claim more than a geo-graphical reality to Africa is often con-demned and reproached. The pursuit of African integration is said to be too pie in the sky a fantasy, which distracts from tak-ing realistic incremental actions. Thus, going for unity on a big scale is pro-nounced dangerous!

AFRICA IS RICH YET SO POOR!

A brief overview of the African economic scenario reveals a paradox where the continent that has rich mineral re-sources, nearly a billion people and a land mass which can contain China, USA, India, Western Europe, and Argentina all together is in the unacceptable state of being an object of aid, debt and loans.

Africa should have been a production and innovation hub not a charity and aid centre of the world where currently ‘donorship’ has sadly replaced African national ownership’ of not just Africa’s resources, but even worse Africa’s own agency, autonomy and independence to shape and deter-mine policy and direction to undertake national develop-ment.

The main thrust of the African quest to unite such key ideas, projects, programmes and infrastructures connecting its politics, knowledge and the economy flows from a recog-nition that Africa must organise a production, economic and innovation system by integrating consumers with suppliers,

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Aid and National Development: Where is the African Strategy? By Mammo Muchie

“...they (Africans) have not tried a uni-

fied African project yet that inspires self-

recognition and self-organization in order to meet challenges and tap into opportunities

together. ”

Page 9 SOUTH BULLETIN Reflections and Foresights

Africans continue to experience fragmentation that repro-duces dependence on outside powers. But they have not tried a unified African national project yet that inspires their self- composition, self-organisation and self-definition and self-recognition as Africans in order to deal with challenges and tap into opportunities together. Their ‘advisors’ provide hundreds of reasons why Africans are different from each other. Why they cannot come together. The fact that under conditions of fragmentation and dependency, the existing fractured states have not succeeded to transform structurally and undertake a credible national development strategy is very often conveniently ignored. Strategies that accentuate fragmentation continue to be devised.

No one says or counsels that going on a path of fragmenta-tion that leads to nowhere is even more unrealistic and uto-pian than a united strategy that can work which has not been tried yet in spite of the compelling recognition over half a century now that either Africa unites or per-ishes!!

Instead the search for a united African na-tional alternative gets castigated for being futile and utopian. But when too many frag-mented states scramble for resources care-fully doled out to them from an international aid regime to pursue goals they can hardly meet, no one dares to say this path is even more utopian than the alternative African national project that has never been tried. Where there is no African national project in place, there is a big void at the heart of Af-rica’s confident march to the future, where there will be no clear African national strat-egy to guide policy and practice!

Africans are now treated to admonishments from the likes of Bono and Wolfensohn, who are calling openly for African unity. At the Aggrey-Fraser-Guggisberg Lecture in Accra, Ghana under the title “Africa in the Global Century: Partnerships for Success”, the former World Bank President, James Wolfensohn, argued for Africa to unite saying: “Africa can make the best of the opportuni-ties and wealth available to it to grow its people and econ-omy if it unites.” (Wolfensohn quoted in Dogbevi, 2008)

The World Bank has also begun to echo the ‘integration line’ by recognising that the flow of goods, capital and people are so limited that inter-African collaboration and integration re-mains largely untenable. Also it has produced the New Devel-opment Strategy Focuses on Regional Integration in Sub-Saharan Africa ( http://go.worldbank.org/U0V68KDLL0).

In addition, a number of countries far and near to Africa ap-pear to develop their own Africa strategy based on their un-derstanding or mis-understanding of what they think Africa is and may or may not be, or become. The list continues. The EU has had an Africa strategy since 2005. The Chinese have theirs. The Indians had a Summit in March 2008. The Japa-

nese held a summit on May 28, 2008. Even a small coun-try- Denmark, has set up an Africa Commission like the Blair commission before it, to organise its own mode of interven-tion in Africa. It looks like more countries will develop strate-gies on, for and to Africa and probably not with Africa de-spite the abundant talk of partnership, national ownership the Paris terms and such like rhetoric and discourse.

What seems to be lacking is the African strategy for Africa and a combined African strategy from those who make strategies for Africa and others involved in business in and for Africa.

The time is long overdue to make each of the nearly billion Africans in the continent develop a pan- African spirit and unite on the shared experience, challenges and a grand project to transform Africa from an agrarian economy to a knowledge-service and knowledge- industrial economy to

achieve food security and improve the health, education and well being of all the people, and not just a few elites. Only then can Africa achieve the freedom, se-curity and stability to emerge with its own voice and act with policy and practice to secure its independence without fear or favour in a complex world.

National Spirit Necessary to Offset Perva-sive Fragmentation and Donor Depend-ency

The problem is that after nearly 50 years of post- colonial independence African economies continue to be fragmented in spite of the AU /NEPAD salutary proc-esses. The more the fragmentation amongst African economies deepens the harder it is for each of the fragments not to be supplicants to the aid system. Africa

thus also faces another critical dilemma of being an un-equal ‘partner’ with the burgeoning aid industry that has created a business of what is known as ‘technical assis-tance,’ where those who provide the aid consume a size-able portion of the resources allocated, and the recipient Africans continue to be in a vulnerable position as long-term the aid receivers are unable to get out of this dependency situation.

In general, it may not be easy to disprove that aid is not useful to some within the recipient countries. But, this does not validate aid or the international aid system per se, since it is not also difficult to show, that the long term impact of aid is negative - If we proceed from the normative prefer-ence that the recipient countries options to plan their devel-opment free from conditions imposed that often do not take the specific context of the countries can be misdirected by the international aid system. In the long term, it is better to take the suffering and learn how to fish rather than receive fish for a day. Recently Tanzania announced to all the do-


Page 5

“It looks like more countries will develop strategies on, for and to Africa and proba-bly not with Africa despite the abundant talk of partnership, national ownership the Paris terms and such like rhetoric and dis-course. ”


Page 6

There is an increasing trend among policy makers, researchers, innovation surveyors and technocrats to profoundly rely on pa-tent statistics as indicators of inventive activity. It is now widely recognized that one of the key aims of measuring innovation performance is to help the formulation of innovation policies, thus putting overly high stakes on interpreting indicators and statistics concerning them. Patent statistics (application/grant) do have intrinsic value as a reliable (if not an immediate proxy) indicator of innovative activity. The work of the OECD in compi-ling and interpreting patent statistics has been remarkable. They are broadly seen as correlative to R&D output. Innovation is at the core of economic growth, and hence the use of patent statistics to indicate innovative activity in a geographical loca-tion would warrant decision makers to arrive at certain subjec-tive conclusions. While patent statistics may in themselves be objective (when in-terpreted along with specific caveats), their subjective use and interpretation risks at times a biased estimation of innovation capacities. Among various factors that attribute to the strength of patent counts, the following two are most important: Firs-tly, since patents (excluding utility models and design patents) are granted for inven-tions that pass the patentability threshold (novelty, utility/ industrial application, non-obviousness/inventive step), they are considered safe to avoid double counting of inventions. Secondly, their easy availabi-lity and fair authenticity presupposes strength in counts, since all patent offices keep the official records for patents filed/granted, including their aggregates.

However, the use of patent statistics to understand or measure innovative activities within a particular geographical location is often not free from defects. Distinct from problems identified in the 2008 WIPO report in the form of caveats placed therein, some of the major problems in relation to the use of patent sta-tistics are with reference to assigning indicative value to a pa-tent count. Some patents may be more valuable than others. Hence, patent quantity without proper value assigned to the quality of the patent applied/granted would be less indicative of the actual measure of innovation. There are various ways in which the value of a particular patent can be arrived at. It may approximately depend on licensing values attached, low/high level of patenting activity in the particular technology field (if such a technology filed heavily relies on patents), importance of the invented technology in global knowledge trade flows (as hi-tech or low-tech), patents that are essential to technical stan-dards, etc. Such nuanced distinctions concerning values assi-gned to patents makes it generally difficult to compare patents at micro level (firm level) and macro level (among regions/nations etc…), or as technology indicators. Generally, it is found

that relative strengths of patenting activity in developing countries (except some emerging countries with due re-ference to caveats) do not lie in hi-technology sectors. Hence, placing undue reliance on the volume of paten-ting activities may not be indicative of innovative activi-ties, as the values they generate are less significant to global knowledge trade flows.

Patent statistics are used in innovation surveys for map-ping and comparing innovative activities across various countries with an aim to arrive at a formal link between patents, innovative activities and economic growth. Since patenting activities in developing countries are generally incremental (and not breakthrough), even considering that they innovate in hi-tech sectors, in terms of value

the subject matter patented may be of less critical significance to global knowledge trade flows. In this context , it is impor-tance to look into licensing values atta-ched to resident patent activities in emer-ging countries, vis-à-vis their counterparts in developed countries. The same holds good for foreign patenting activities of de-veloping country inventors that rely on the PCT/Paris Convention route for filing appli-cations. However, licensing terms and en-suing royalty stakes involved are private information which firms/organisations might be unwilling to disclose. Thus com-paring innovative activities by purely re-lying on the volume of patenting activities does not constitute a sufficiently nuanced

position unless other complementing factors concerning innovation, technical change and value derived from in-novation are considered.

The WIPO, in the last week of July 2008, released the “World Patent Report: A Statistical Review (2008)” (http://www.wipo.int/ipstats/en/statistics/patents/wipo_pub_931.html#g13). Not surprisingly, the WIPO Patent Report 2008 does not try to build linkages between patent statistics vis-à-vis innovative activities, or make any conclusions concerning innovative activities in particular countries.

This report is third in the series of WIPO’s annual publica-tion on compiled statistics derived from various sources viz., Patent Cooperation Treaty (PCT) statistics, and pa-tent information shared by the national/regional patent offices. In many ways, the report is valuable in unders-tanding the use of patent system in both developed and developing countries, including its internationalisation. The report has shown consistent improvement in provi-ding objective and detailed information in comparison to the previous years, mainly by providing extensive statis-

Measuring Innovation: Conceptual Underpinnings of the WIPO Patent Report 2008 By Yogesh Pai

“Patent statistics are used in innovation sur-veys for mapping and comparing innovation activities…to arrive at a formal link between patents, innovative activity and economic growth.”


tics in different fields of technology that highlight and identi-fy key/ emerging technologies, statistics pertaining to the use of utility models as an alternative to patents, technology indicators (relative specialization index), statistics on opposi-tion and invalidation, costs of patenting etc. The report, for the first time, has made provision for separate annexures that are extremely useful in understanding methodologies used in arriving at precise patent indicators. Apart from this, special attention has been paid to define caveats, and a key section has been devoted to apprise the general methodolo-gy adopted.

While a WIPO press release dated 31st July 2008 (PR/2008/562) states that “World Patent Report Confirms Increasing Internationalisation of Innovative Activity”, it falls short in concluding that higher patent filings in emerging countries is indicative of inventive activities accruing to such countries without reference to the broad caveats applicable. Two new caveats find specific mention in the 2008 report. These can be of excellent help in understanding how patent-ing activities are correlative (or not ) to various micro and macro economic factors. It pertains to: (i) “since the use of the patent system for protecting inventions varies across countries and industries, applicants’ different filing strate-gies or filing preferences may render direct comparison of patent statistics difficult”; (ii) cross-border patent filings de-pend on various factors, such as trade flows, foreign direct investment, market size of a country, etc. These can be use-ful in ascertaining a fairly accurate level of inventive activity when patent statistics are used in conjunction with multiple innovation indicators.

It may be recalled that the 2007 WIPO Patent Report: Statis-tics on Worldwide Patent Activities (http://www.wipo.int/freepublications/en/patents/931/wipo_pub_931.pdf) had specific mention to the effect that local innovation can be assessed through resident patent filings as they are a “reliable indicator of inventive activity”. This was problematic in many ways as there are fine caveats to rely on inventive activities of residents as constituting innovation within a particular geographical location. The problems mainly per-tained to: For those inventive activities taking place in a par-ticular geographical location, the inventor may file a first application (resident patent) from any patent office across the world. This at least creates theoretical problems in terms of identifying innovation activities in a particular geographi-cal location, which at times may lead to double counting. There is no practical methodology in fundamentally estab-lishing that innovation accrued within a particular geographi-cal location is always attached with the first filing of resident patents. Further, identifying local innovation by purely relying on patent activities by nationals/residents in a developing country may underestimate or overestimate the underlying national inventive activity. For e.g., cross-border acquisition/merger of a firm by a developing country resident for innova-tion actually accruing in developed country jurisdiction may

Page 7

lead to overestimation in local innovation capacities. This is rightly placed as a caveat in the report wherein it states that “due to the increase in the internationalisation of research and development (R&D) activity, R&D may be conducted in one location but the protection for the invention might be sought in a different one”.

Another predicament involved in assigning higher degree of importance to resident patent activities as corresponding to innovative activity of domestic firms is that , a large number of patent applications filed by foreign companies through their locally incorporated branches in developing countries may be counted as domestic/resident patents, hindering any objective assessment of the real level of the local inno-vation capacities in the country of origin. The 2008 report in defining the country of origin, states that: “patent applica-tions include information pertaining to the country of resi-dence of the inventor and the applicant (or assignee)”, sub-ject to the the new caveat that “Country of origin used in this report is based on the country of residence of the first-named applicant (or assignee), which will include companies that are domiciled in a country but which may be effectively owned or controlled by overseas interests. This is particular-ly the case in countries with large foreign direct invest-ments”. With proper caveats in place, the possible emphasis on resident patent activity seems self-explanatory.

For the first time, the report bears mention to opposition and invalidation statistics. It has been widely noted that there is increasing tendency among patent offices to grant fewer patents and among the courts to invalidate patents that are granted. For example, a recent 2008 annual report released by the EPO noted that the number of European patents granted in 2007 fell when compared to the previous year despite an increase in the number of applications filed at the EPO. This is highly critical to a disciplined interpretation of patent statistics in a holistic manner, since reversal rates do intrinsically constitute an important factor in measuring innovation performance.

The 2008 report has come up with strong caveats, which will indeed go a long way in developing nuanced propositions concerning the use of patent statistics for measuring innova-tion performance. Hence, the burden of interpreting such patent statistics with due consideration to caveats subscri-bed in the report must firmly lie on its users. Policy makers should interpret patent statistics with greater caution and read the caveats within. However, the WIPO as an institution with a broad mandate to promote innovation can and should develop multiple indicators to measure innovation perfor-mance, so as to minimize the inherent limitations posed in the interpretation of patent statistics in a developing country context.

Yogesh Anand PAI works with the Innovation and Access to Knowledge Programme, South Centre, Geneva.

He can be contacted at [email protected]

If you’re Asian, chances are your country is a member of one of many acronyms: ASEAN, APEC, BIMSTEC, BIMP-EAGA, IMT-GT, SASEC, SAARC, SESCA, CAREC, SCO. Your president/prime minister attends one of their annual mee-tings or dispatches the appropriate minister to discuss is-sues that affect your country and the rest of Asia, whether these be tourism, trade, finance, or cross border health. These regional/sub regional blocs were mobilized in the aftermath of the 1997 financial crisis. Also, the IT revolu-tion, integrated production networks, and the rise of China and India as potentially very large markets provided the logic for bringing Asian economies closer together. Free Trade Agreements (FTAs) have proliferated– a veritable “Asian noodle bowl” of inter-country relationships. Howe-ver, what are these truly worth beyond the front-page photo-ops of heads of state, arms linked and dressed uniformly in the host country’s national dress?

Two regional integration programs funded by the Asian Development Bank (ADB) seem worthy of closer scrutiny: the Grea-ter Mekong Subregion (GMS) and the Cen-tral Asia Regional Economic Cooperation (CAREC) Program.

Under the aegis of the GMS, the East-West Corridor, once completed, will connect Viet-nam all across to Myanmar, thereby linking Thailand, Cambodia, Laos, Vietnam and Myanmar facilitating the movement of goods and services. Once-upon-a-time sleepy Savannakhet in Central Laos is poi-sed to become an economic hotbed as Thai and Vietna-mese goods and products pass over the Savannakhet-Mukdahan bridge. Under the Central Asia Regional Econo-mic Program (CAREC), an ambitious infrastructural grid will restore, rebuild and revive the ancient Silk Route. Plus ad-ditional investments for airports, railways and ports will create a transport linkage between Europe and Asia. The total bill: a whopping US$18 billion.

The optimistic argument to membership in a regional body is an upbeat message of deliverance: by setting up favou-rable trading policies and adopting market-based reforms, the Promised Land of economic growth will surely be arrived at. Further, member countries can leverage their strengths to overcome domestic bottlenecks. Regional cooperation and integration brings otherwise isolated communities into the fold of economic activity. In tandem with working mar-kets are positive social spill-overs: peace and stability, so-cial inclusion, shared norms and values, and community-building.

However, historical animosities are proving difficult to sur-mount. Despite the so-called “peace dividend” --- ADB’s

mantra that serves as a default response to queries about GMS social stability -- negative perceptions persist, and pro-vide fodder for continuing fear and mistrust amongst the neighbours. Not too long ago, a reckless statement by a Thai actress on the “true” historical ownership of the Angkor Wat closed down the borders and suspended flights between Thailand and Cambodia. Then there is the current spat-in-the-making, once again, between the two countries over the Preah Vihear temple issue that has now brought UNESCOon the cusp of intervention.

Further north in the region is Tajikistan’s recent civil war which constituted a recent piece of historical baggage for that country. There are on-going tensions amongst all coun-tries on the control and distribution of water resources --- an

agenda item that is perpetually off the table during bi-annual discussions among senior officials in Central Asia.

So much for ADB’s “Good Neighbours, Good Partners, Good Prospects” banner slogan.

For both regions, economic inequities are pervasive. In the GMS, the average regional income in 2002 was approximately US$4000. An average Thai will have an in-come almost four times more than his Lao, Cambodian or Burmese counterpart. In Cen-tral Asia, oil-rich Kazakhstan enjoys a per capita income five times higher and has a land mass more than twice the size of all the Central Asian republics combined.

Human capital indicators are hardly promi-sing. Life expectancies in Laos, Myanmar, Tajikistan and the Kyrgyz Republic are among the lowest in the world, averaging between 60-65 years, almost at par with their African coun-terparts. Governance practices remain a challenge as reflec-ted by low scores on Governance and Stability Indicators and the Corruption Perception Index.

All these suggest that for all the hype over regional coopera-tion, these countries suffer from internal fragmentation. This begs the question of whether countries facing domestic frac-ture can cooperate with each other to deliver the promised goods.

ADB certainly has a lot more thinking to do when it mulls over the next self-congratulatory regional newsletter even as the request for proposals for consultants to the next big infras-tructure loan project has already been issued.

Tess Cruz-del Rosario is a Senior Research Fellow at the Cen-ter on Asia and Globalization at the Lee Kuan Yew School of

Public Policy, Singapore.

He can be contacted at: [email protected]


Boom, Bane or Bluster: Regional Blocs in Question By Tess Cruz-del Rossario

“What are these (regional blocs) truly

worth beyond the front-page photo-ops

of heads of state, arms linked and

dressed uniformly in the host country`s national dress? ”

Aid and National Development: Where is the African Strategy? (continued from page 5)


nors that they want time to think and cope with the influx of hundreds of donor inputs. They said they needed time to work out what this all means and even made a moratorium on donors’ visits to Tanzania!

It is thus no exaggeration that a country relying on aid is most likely not to develop a national strategy without the interference and the factoring of the interests and policies of the aid system. Being a recipient in an international aid system for many African countries has not brought develop-ment but corruption and poverty. It undermines a given state in Africa from making mistakes and learning from the routines and practices of creating an integrated African na-tional economy. Africa cannot afford to continue to suffer the opportunity cost of receiving aid only to defer building the much needed ability to create the capacity, capability, competence, learning and innovation to transform the largely agrarian and subsistence economic system.

In Conclusion

Over half century has passed; Africa suffers from myopia of

a particularly pernicious 'fragmentation-dependence.' The root problem for this unchanging predicament lies in the state of fragmentation that invites dependency while con-versely continuing to prevent the evolution of an African national spirit, purpose, project and strategy.

There is need for a fresh approach, a new departure to em-bark on a roadmap to convert the 'fragmentation-dependence' dilemma into an enabling integration-self-sustaining, innovative, learning, capabilities building' na-tional project - and re- launch African development on a secure pedigree with confidence and inspiration.

Mammo Muchie is the coordinator of DIIPER, Research Centre on Development Innovation, Denmark

This article also appears at

http://www.pambazuka.org/en/category/comment/49921.

(See Y. Tandon, Ending Aid Dependency, South Centre and Fahamu, 2008). According to UNCTAD, during 2003-05, the rich countries committed $1.3 billion of ODA funds to improving governance in the LDCs, and only $12 million to agricultural improvement.

It is also about this time that the language of “aid effective-ness” emerged in the vocabulary of the donors and the BWIs. The Paris Declaration on Aid Effectiveness (PDAE) of the Organisation of Economic Cooperation and Develop-ment (OECD) emerged from this background. In a closely argued analysis, Ending Aid Dependence shows that the underlying basic philosophy of PDAE is that for aid to be

“effective”, the governance of the recipient countries needs to be improved, and be accountable to the donors and do-mestic CSOs. PDAE argues skillfully, using laudable princi-ples such as ownership, mutual accountability and aid pre-dictability. As with the Washington Consensus, however, the PDAE is pretending to be a “consensus” position, but it was never negotiated through any intergovernmental regu-lar process.

Yash Tandon is the Executive Director of the South Centre, Geneva. He can be contacted at: [email protected]

Editorial: Role of Civil Society in National Space (continued from front page)

South Centre News

Appointment of new Executive Director of the South Centre w.e.f 1 March 2009

The Board of the South Centre met in Geneva from 6-7 August 2008 for its 21st meeting and appointed Mr. Martin Khor as the new Executive Director of the Centre. Mr. Martin KHOR will take office as of 1st March 2009 at the end of tenure of the current Executive Director, Dr. Yash TANDON. Mr. Khor, a national of Malaysia, is the Director of Third World Network, a network of several NGOs in different parts of the developing world.

Upcoming Event: Beyond Aid Dependence

South Centre along with ActionAid and CIVICUS is organizing a workshop on “Beyond Aid Dependence” on 1 September 2008 in Accra. The workshop is being organized on the eve of the Third High Level Forum on Aid Effectiveness in Accra, Ghana from 2 –4 September 2008.

For more information, go to: http://www.southcentre.org


Effective Coordination Works!

How developing countries blocked a TRIPS-Plus IP Enforcement Initiative at the

24th Universal Postal Congress?

Through intensive and effective coordination, developing countries were able to introduce key amendments to the Resolu-tion in Committee 4 of Universal Postal Congress (UPC) and in an Appeal to the Plenary of the Congress.

There was a two-stage coordination process among the developing countries.

Stage I: Adoption at Committee 4 of UPC

• 24-27 July 2008: Developing countries closely coordinate their positions regarding the sensitive Resolution 40.

• 28 July 2008: Committee 4 announces that the Agenda Item 10 regarding Customs related matter would be moved from 30 July to 1 August 2008 (which is an official UN holiday in Geneva) to accommodate the availability of a WCO repre-sentative to address the Congress.

• 1 August 2008: A WCO representative makes a presentation misleading UPC participants into believing that WCO and its member states have achieved consensus on their TRIPS-Plus-plus agenda on IP Enforcement, namely Standards to be Employed by Customs for Uniform Rights Enforcement (SECURE).

• 1 August 2008: During Committee 4, Brazil suggests an amendment to the Resolution. Many delegates request the floor to introduce further amendments to the Resolution. The Chair stops the debate and calls for a vote on Resolution 40. Result: 95 countries vote yes in favour of the amendment, 22 against and 20 countries abstained from voting.

Stage II: Appeal at Plenary of UPC

• 4 August 2008: An Appeal was submitted to UPC Secretariat by 10 developing countries. These were Egypt, India, Jor-dan, Libya, Malaysia, Pakistan, Saudi Arabia, South Africa, Syria and Turkey.

• 5 August 2008: A cross-continental coordination meets to brief developing countries on the Appeal submitted to UPC Secretariat. The delegates were urged to support the amendments. Pakistan, South Africa and Egypt took lead in the coor-dination role.

• 5 - 7 August 2008: Intensive coordination meetings are held during UPC and extensive support is received from deve-loping countries and their institutions, for instance, the African regional postal union.

• 8 August 2008: In plenary of UPC, Resolution 40 is re-opened for consideration. The Appeal is presented by the dele-gation of South Africa and is subsequently adopted by the Congress.

The Outcome:

Through this close-knitted and timely coordination, developing countries were able to reverse the Resolution 40 and in process block the TRIPS-Plus IP Enforcement Initiative at the 24th Universal Postal Congress. This was not an easy reversal, as Resolution 40 was adopted by vote on 1 August, 2008, despite concerns raised by many developing countries (95 countries voted in favour of the Resolution, 22 against and 20 countries abstained from voting.)

In Future:

The Innovation and Access to Knowledge Programme, South Centre will continue to facilitate coordination where necessa-ry and appropriate in the interest of developing countries at World Intellectual Property Organisation (WIPO), World Trade Organisation (WTO), World Customs Organisation (WCO), World Health Organisation (WHO), Univeral Postal Union (UPU), Interpol, International Telecommunication Union (ITU) and other fora.

→ South Centre took a series of video interviews with delegates who participating in the amendment of Resolution 40. These will shortly be made available on the South Centre Digital TV at http://southcentre.blip.tv


Page 11

Op-Ed: Returned to Sender, TRIPS-Plus IP Enforcement Attempts

Plus IP negotiations agenda under WTO and WIPO, devel-oped countries shifted the battlefield to the WCO, which is relatively unknown to the international community for set-ting IP regulations, and through manipulating WCO, to fur-ther influence other international forums like UPU. Other forums include WHO's "International Medicinal Products Anti-Counterfeit Taskforce" (IMPACT), Anti-Counterfeiting Trade Agreement (ACTA), and, not to forget, G8. By laying eggs in multiple baskets, in case one option fell down, a fallback option would stand.

Consistent with their strategy of forum-shopping, it is not too surprising to see that representatives of WCO misled UPC participants by stating that WCO and its Member States have agreed upon those TRIPS-Plus standards (SECURE) at WCO. By doing so, it legitimises their role in the initiative that they promote. UPU is a specialised agency of the United Nations with 191 member states. Most of the UPC partici-pants being from postal authorities of member states, are not fully aware of the discussions of SECURE at WCO. In fact, SECURE received no consensus and is actually com-pletely open for further negotiations at WCO. However, the up-to-date text and Decision of SECURE by WCO Council remain undisclosed to public by WCO Secretariat. Under

such circumstances, how would the UPC participants have access to the background information of SECURE and verify the claim of WCO?

“It is the power of knowledge, and developed countries per-fectly know how to monopolise knowledge,” Professor Nor-man Given, a Board Member of the South Centre, empha-sised during 4th South Intellectual Platform, “How to break the information monopoly is a challenge.”

The Appeal at UPC has now been adopted. For the moment, developing countries can let out a collective sigh of relief that Resolution 40 has been returned to the sender. However, the challenges remain ahead. To guard the common policy space of the South, fences must be well constructed and constantly reinforced.

Xuan Li is the Coordinator of Innovation and Access to Knowl-edge Programme (IAKP) at South Centre, Geneva.

She can be contacted at: [email protected]

New South Centre Books and Research Papers

More information at http://www.SouthCentre.org (English, French and Spanish)

Ending Aid Dependence

South Centre and Fahamu Books

To be launched in September 2008

www.aidexit.org

A Guide to Pharmaceutical Pa-tents. Volume 1 and Volume 2

South Perspective Series

South Centre

(Available online in full text)

Unity in Diversity: Governance Adap-tation in Multilateral Trade Institu-

tions Through South-South Coalition-Building

Research Paper 17

South Centre

(Available online in full text)

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Reflections and Foresights

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Op-Ed: Returned to Sender, TRIP-Plus IP Enforcement At-tempts by World Customs Organisation through Universal Postal Congress By Xuan LI

(Continued on page 11)

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Articles in the South Bulletin express views of the authors and not those of the South Centre or its Member Countries.

Time: Friday, 15: 42, 8 August 2008.

Venue: 4th South Intellectual Platform Meeting of the South Cen-tre, 18 kms outside Geneva, Switzerland.

SMS message: “CONGRATULATIONS!” “APPEAL ON INTELLECTUAL PROP-

ERTY ENFORCEMENT HAS BEEN ACCEPTED.”

Simultaneously, two more similar text messages were received on the mobile phone from developing countries’ negotiators after an uphill battle on intellectual property issues in Geneva.

The messages referred to the successful adoption of an Appeal to have Resolution 40 reopened in Plenary of 24th Universal Postal Congress (UPC), co-sponsored by 10 devel-oping countries, viz Egypt, India, Jordan, Libya, Malaysia, Pakistan, Saudi Arabia, South Africa, Syria and Turkey, submitted on 4 August, 2008. Resolution 40 was another “forum-shopping” attempt by the developed countries to promote "TRIPS-Plus" agenda on international border enforcement through backdoor, at the 24th UPC meeting held in Geneva from 23 July to 12 August 2008, frustrated by developing countries with their joint endeavours.

The amendments to the preamble of the Resolution proposed in the Appeal are as fol-lows: (a) PP 1 (bis) -- "Without prejudice to the ongoing IP related work in other compe-tent international organisations", and (b) PP4 (alt) -- "Understanding that determination of counterfeit items is the responsibility of relevant national authorities, in accordance with national legislation".

It is not an easy reversal, as Resolution 40 was adopted by vote on 1 August, 2008, despite concerns raised by many developing countries (95 countries voted in favour of the Resolution, 22 against and 20 countries abstained from voting). See Box “Effective Coordination Works” on Page 10.

Resolution 40, entitled “Counterfeit and Pirated Items Sent through the Post”, is one proposal of a general nature to the 24th UPC, which stipulates that “Customs and ex-perts on intellectual property rights are primarily responsible for determining whether an item is counterfeit”. Though one amendment had been introduced before the vote, con-cerns remained as the adopted Resolution 40 can be interpreted as introducing a shift of responsibility from judiciary to Customs on determination of IP infringement. Noting that Customs has basically no mandate nor legal competence to determine whether an item is counterfeit, the shift of responsibility would imply unexpected trade barrier in global economy.

WCO was primarily responsible for the birth of Resolution 40. Resolution 40, unlike many other proposals of such nature, was presented by the World Customs Organization (WCO)-UPU Contact Committee and the Postal Operational Council (POC) 3 Customs Support Project Group to the POC for examination in January 2008. It can be further traced back to a Memorandum of Understanding signed by the UPU and the WCO in July 2007. Noting that SECURE Working Group was established during the same period at WCO, it signifies the strategic coherence of developed countries to have the same agenda promoted simultaneously in various international and regional forums. While encountering resistance from well-coordinated developing countries to promote TRIP-

Conceptual Underpinnings of the WIPO Patent Report 2008, South Bulletin (Geneva), Issue 21 August 16, 2008.

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