|Intellectual Property: The Fuel of Interest to the Fire of American Genius|
By Timothy H. Lee
Thursday, February 09 2017
What competitive advantage begat American exceptionalism?
How, despite such a brief lifespan, did America become and remain to this day the most inventive, influential, prosperous, creative nation in human history?
Some rationalize our success as a happenstance of geography and abundance of natural resources.
But that rationalization can't explain why nations like Russia or Brazil with even greater natural resources don't begin to approximate our record of ingenuity and prosperity. Nor does it explain why nations like Japan with comparatively meager natural resources have nevertheless flourished.
Clearly, natural resources aren't what distinguishes America, as many nations possess similar or greater abundance. So what does?
A deeper wellspring is this country's foundational respect for private property, based upon natural rights principles advocated by Enlightenment philosophers like John Locke.
That regard for property rights includes intellectual property (IP), including copyright, patent and trademark protection for creations of the mind. Many observers have labeled IP protections the "special sauce" of American invention and creativity.
Our Founding Fathers certainly recognized the importance of intellectual property as both a natural right and a utilitarian impetus for prosperity and creativity, specifically enshrining IP protections in the text of Article I of the Constitution. Years later, former patent attorney Abraham Lincoln observed that IP "added the fuel of interest to the fire of genius."
And the result is unambiguous. From Thomas Edison to the Wright brothers, from the film industry to the music industry, from lifesaving pharmaceuticals to software, from the telephone to the television, no society parallels our astonishing record of innovation, influence and prosperity. Today, IP-related U.S. industries account for $5.8 trillion, or 35% of our GDP, which exceeds the GDP of any other nation in the world. Importantly, IP industries also account for an astounding 74% of total U.S. exports, nearly $1 trillion in value.
America's IP industries also employ over 40 million workers, and are growing at a faster rate than other sectors. Additionally, employees in IP industries earn 30% more than those in other industries, an average of $50,576 per employee compared to the U.S. overall average of $38,768.
That causal relationship between our tradition of IP protection and our record of creativity isn't merely subjective opinion or speculation. It is actually quantifiable.
To wit, the U.S. Chamber of Commerce's Global Intellectual Property Center released its latest annual International IP Index this week, comparing 45 nations that account for fully 90% of world gross domestic product (GDP) in their degree of protection of patents, copyright, trademarks, trade secrets, market access and enforcement.
As in previous years, the U.S. stands atop the global ranking of IP protection, although recent slippage has narrowed our margin.
The Index data clearly and convincingly establishes that nations more protective of IP rights consequently enjoy greater innovation, prosperity, levels of investment, research and development, creative content and technological advancement:
The most up-to-date data on the benefits of IP protection reveals that IP is, in fact, a critical instrument for countries seeking to enhance access to innovation, grow domestic innovative output, and enjoy the dynamic growth benefits of an innovative economy. Conversely, weak IP protection stymies long-term strategic aspirations for innovation and development...
Taken together, the 21 correlations included in this Index present a clear picture: IP protection goes hand-in-hand with the aspirations topping government agendas around the world. As Table 1 suggests, a robust national IP environment correlates strongly (having a strength of 0.6 or above) with a wide range of macroeconomic indicators that fall under the umbrella of innovation and creativity—the very same indicators that are found in national strategies for economic development of many economies today. This message has only become stronger over the past 3 editions of the Index. Adding several new variables each year and expanding the sample size by 50% (from 30 to 45 economies), the strength of the relationship between IP rights and crucial economic activities has grown.
In other words, stronger IP protections secure greater national wealth in almost every type of measure. A cursory glance at the nations atop the Index—the U.S., the U.K., Germany—versus the nations at the bottom—Venezuela, Pakistan, India—illustrate that reality.
But no nation bears that causal relationship out more than America.
As we enter a new presidential administration amid an increasingly competitive global economy, not to mention the constant threat of piracy of others' IP, making good on the promise to "make America great again" demands that we preserve and extend America historical advantage in protection of copyright, patents, trademarks, trade secrets and enforcement.
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