Maximisation of Foreign Direct Investment; Building Sustainable Framework For IPRS Protection

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By Temiloluwa Olowoyo

INTRODUCTION:

The basic building blocks of any nation that are keen on developing its economy to reflect tangible and sustainable development, without doubt, lies in its intellectual property. This is true of the developed countries of the world that have over the years been able to nurture and maximize the potentials that are inherent in their populace by creating a conducive atmosphere in terms of policies and frameworks (Laws) for intellectual minds to exploit their infinite innovative and creative ideas.

However, beyond transforming this intellectual property to reflect in the individual countries, another sphere of opportunity is opened for these expressed ideas to be transferred into the less developed countries for them, also, to take advantage of these IPs to massively increase, not just the development but also the growth of their economy, a move that is capable of changing their status from a third world or developing country to a developed or world-class economy.

This article has been precisely tailored to address how the protection of intellectual property can be used as a tool to initiate a quantum leap for developing economies, such as Nigeria to also stand out as a developed countries and how to further generate a sustainable framework for all the countries in the world to ensure a continuous and meaningful engagement with intellectual properties spanning across every country in the world, both developed and developing countries.

RELATIONSHIP BETWEEN FOREIGN DIRECT INVESTMENT AND INTELLECTUAL PROPERTY

Before delving into this relationship, nothing is truer than the fact that no country will share its intellectual property with another country where there is no guarantee that such IP will be protected, that is, the transfer of technologies from developed countries into developing countries will not be embraced where the underlying IP is not guaranteed protection and conversely, no country will guarantee the protection of an IP of a country where its own IP is not protected, putting this into perspective, Nigeria will not protect the IP originating from Ghana if Ghana refuses to protect the IP from Nigeria. This only adds credence to the fact that countries are constantly looking for ways to maximise the benefits that come with IP information of a Foreign Direct Investment without losing out or at the detriment of the innovative ideas of their own citizens or causing the local companies to suffer from lack of growth.

Economic growth refers to the increase of the real per capita income of a country over a period of time[1]. A country is therefore deemed to record economic growth when there is an obvious and measurable increase in the number of goods and services produced in that country. It is in view of the above definition that innovation and foreign direct investment are seen as viable agents in economic growth.[2]

The international community has recognised this as well as the need to bring about growth and development in the global community, constituted different treaties, agreements and conventions to ensure the recognition and protection of intellectual properties across different territories, however, the enforcement is subject to countries being a party to these frameworks, among theses treaties and conventions are The WIPO Copyright Treaty(WCT), Paris Convention for the protection of intellectual property, The Berne Convention for the protection of literary and artistic works, Madrid Agreement concerning the International Registration of Marks and the Protocol Relating to the Madrid Agreement, Rome Convention but most importantly, the TRIPS Agreement, that is The Trade-Related Aspect of Intellectual Property, the importance of the agreement cannot be overemphasised as it deals primarily with the economic aspect of intellectual property which, of course, is the basis of FDI. In fact, it is now a requirement for countries willing to join the WTO to be a party to the TRIPS agreement.[3] As much as this might be seen as a means of placing the developing countries at a disadvantage to constantly make demands of the technology and innovations coming from the developed countries, it is, undoubtedly, an avenue to ensure that the holders of these IPRs enjoy the benefits attached to them.

 In essence, countries like Nigeria, which are still developing need to define and establish suitable IPRs regime that will balance the trade-off between the copying of highly advanced technologies and the provision of the needed incentives for domestic innovation. As it stands today, Nigeria has a very tight policy and commendable framework for the protection of IPRs on paper, adequate enforcement seems to be the problem.[4]

TRANSFORMING INTELLECTUAL PROPERTY RIGHTS PROTECTION TO REFLECT FOREIGN DIRECT INVESTMENTS.

Nigeria lacks innovative capacity in research and development; this has been reflected in its underdevelopment in terms of technological and medical advancement, and with the lack of enforcement of the laws guaranteeing the protection of IPRs, the IPRs of other countries stand a high risk of being copied. This is not to say that these local companies do not face substantive hardship in copying these technologies in terms of transportation, electricity, materials, logistics etc. This simply points to the fact that what Nigeria lacks in innovation, it makes up for it in imitation, an act which tremendously affects the decision of other countries to invest in developing countries such as Nigeria. To understand the impact of IPRs in influencing the decision of firms to invest abroad, certain economic considerations are taken note of, these include the ownership advantage Transnational Companies (TNCs) have over local firms in terms of intangible assets, especially as it concerns new and improved technologies, reputation for quality, people skills developed over the years[5], secondly, location advantage, the business setting or atmosphere must be friendly in terms of transportation, input prices, goods distribution network and most importantly, the taxation system.

Nigeria lags behind in innovation so much that in the period between 1964-2010, non-resident companies have consistently recorded the highest level of patents in relation to resident companies, for example in 1990, resident companies registered 12 patents while NRCs registered 246.[6]

Engaging in foreign direct investments is a strategy used by companies to expand their business by taking advantage of new markets with lesser production costs and access to new technologies, equally, countries also strive to make their markets attractive destinations for FDIs as they can transform this into economic development.[7] It is imperative to note that FDIs do not automatically reflect national economic development, further efforts lie in the hands of the government to create frameworks and policies for the suitable business environment, enabling policies to facilitate human and institutional capacities must also exist. The absorptive capacity, that is, education must be financially and administratively regulated for the benefits inherent in FDIs to be harnessed.[8]  It is noteworthy that most of the breakthroughs in the medical field in the developed countries are initiated and completed in their educational institutions, i.e. universities, a move which will constantly ensure the continuous innovative ideas among the youths; this is made possible through the government’s commitment to funding research and development in this sector. Another condition is for the country to have a robust financial system.

ASSESSMENT OF INTELLECTUAL PROPERTY RIGHTS PROTECTION FRAMEWORK

In a research conducted in 2006[9], it was reported that the relationship between IPRs and economic development is double-edged, this is so because as much as IPRs protection can encourage innovation in research and development, it can also occasion monopolistic tendencies as well as reduce technology diffusion, these are factors that are considered as economic growth agents, especially in countries with little innovative capacity.

This has brought about different conclusions that IPRs protection will have different economic impacts, with the developed countries being the highest beneficiary compared to the developing countries. Strengthening IPRs protection across the board may inhibit innovation on the part of the local companies.

Amidst all these evaluations, the economic growth that subsists in FDIs cannot be side waived; a balance can be struck between this seeming parasitic relationship by assessing the varying technological needs of the developed and developing countries. Once the developing countries, such as Nigeria, are able to identify their economic and technological needs[10], they must also ensure the underlying IPRs are protected, in order to ensure a trade relationship that both countries can take advantage of. Worthy of note is the fact that if the framework for IPRs protection in the developing countries is not firm enough, both in content and execution, the developed countries will be forced to truncate their level of investment or adopt a more technical approach to their production process thereby making it more difficult for the imitators to take advantage of their IPRs[11], a move that will invariably affect innovation and the developing countries will be at the receiving end.

Currently, Nigeria has a strong IPRs protection framework covering copyright[12], trademarks[13] and most importantly, patent and industrial designs[14], it is also a party to the WTO and by implication, the TRIPS Agreement which has in its article 7 a provision that facilitates the enforcement of the protection of IP Rights, it states;

‘the protection and enforcement of IP rights should contribute to the promotion of technological innovations and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare and to a balance of rights and obligations.[15]

The TRIPS[16] agreement was essentially built to curtail piracy, counterfeiting and infringement. This is to ensure a swift and smooth international trade relationships by removing the obstacles that may hinder such.

CONCLUSION/ RECOMMENDATION.

The debate as to who benefits more from the relationship between IPRs and FDIs among the developed and the developing countries rages on with analysts and commentators constantly striving to help strike equilibrium. The questions that are constantly being asked are;

  1. How tight should a country protect IPRs to encourage local innovation?
  2. What level of IPRs protection should be obtained to also facilitate foreign Direct Investments?

The forth and back completely lie, on the one hand, on the part of the developed countries constantly trying to ensure the protection of their IPRs, and on the other hand, the developing countries finding ways to boost their own locally bred innovation while taking advantage of FDIs.

This imbalance can be addressed when countries realise that IPRs regime can only be effective when cognizance is taken of the technological advancement of the country, that is, other factors such as robust competition policy, market openness, good manpower development strategy etc. which must be weighed alongside the IPRs regime.

Also, ensuring a competitive market backed up by a complementary competition policy. This will bring about an all-around development between the local companies and transnational companies.

The developing countries in the world today also doubles as the highest importer of technology, this can be reduced if these countries put in place frameworks and policies that will facilitate the promotion of learning such that the citizens will be able to carry out incremental innovations on prior inventions.[17]

Temiloluwa is a law student at the Faculty of Law Ekiti State University. He has a strong interest in Intellectual property law, Space law and Tax law. belladonistemiloluwa@gmail.com

REFERENCE

  1. Furman, J.L., M.E Porter, and Stern (2002). The determinants of national innovative capacity, Research policy.
  2. Onyeka Uche Ofili, 2004; intellectual property rights protection and economic development in Nigeria
  3. Anyawu J.C. (1998). An Econometric Investigation of the determinants of FDI, Nigerian Journal of Economic and Social Studies
  4. wipo.com
  5. Xu, Z. (2000), Financial Development, Investment and Economic Growth.
  6. The Copyright Act, LFN, 2004
  7. The Trademarks Act, LFN, 2004
  8. Patent and Designs Act, LFN, 2004
  9. Trade-Related Aspect of Intellectual Property, (TRIPS AGREEMENT), 1995

[1] Furman, J.L., M.E Porter, and Stern (2002).

[2] Onyeka Uche Ofili, 2004; intellectual property rights protection and economic development in Nigeria

[3] 2

[4] Anyawu J.C. (1998). An Econometric Investigation of the determinants of FDI.

[5]2

[6]www.wipo.com

[7]The world bank, 2011

[8] Xu, 2000

[9] Falvey, foster And Greenway

[10] Saggi (2013), Yank & Maskus, 2001, Chen & Puttitatum, 2005.

[11]2

[12]The Copyright Act, LFN, 2004

[13] Trademarks Act, LFN, 2004

[14]Patent andDesigns Act CAP P2, LFN, 2004.

[15] Article 7, Trade-Related Aspect of Intellectual Property, (TRIPS).

[16] Jatkar, 2009

[17]2

Credit: DNLlegalandstyle

lawpavilion • June 25, 2022


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