Nominal level and actual strength of China's intellectual property protection under TRIPS agreement
| Pages | 71-88 |
| DOI | https://doi.org/10.1108/17544401011016708 |
| Published date | 09 February 2010 |
| Date | 09 February 2010 |
| Author | Guobing Shen |
| Subject Matter | Economics |
China’s IPP
71
Journal of Chinese Economic and
Foreign Trade Studies
Vol. 3 No. 1, 2010
pp. 71-88
#Emerald Group Publishing Limited
1754-4408
DOI 10.1108/17544401011016708
Nominal level and actual
strength of China’s intellectual
property protection under
TRIPS agreement
Guobing Shen
Institute of World Economy, School of Economics, Fudan University,
Shanghai, People’s Republic of China
Abstract
Purpose – The purpose of this paper is to improve the measurement of nominal level and actual
strength of China’s intellectual property protection (IPP), and examine whether the increase of actual
protection strength (APS) is positive or negative impact on China’s provincial economic growth.
Design/methodology/approach – A modified approach, based on Ginarte-Park’s (GP’s) and HL’s
approaches, is used to measure nominal level and APS of China’s intellectual property rights (IPR)
from 1995 to 2007. The pooled EGLS method (cross-section fixed effect) is used to estimate the effect
of China’s IPP and other variables on provincial economic growth.
Findings – The paper proves that China’s APS appears an increase with a phase. China’s IPP level
by GP approach is on the high side, whereas China’s IPP level by HL approach is slightly on the low
side. Nominal level of China’s IPP is largely influenced by the legislation level, whereas APS mostly
embodies the effect of implementing law level. The increase of China’s APS has significant positive
impact on provincial economic growth. However, at the outset of building an independent innovation
country, too strong IPP is bad for the development of innovation capability, and bad for provincial
economic growth.
Research limitations/implications – Because the APS is unknown, it is impossible to use APS as
the dependent variable to estimate the weights of the main influencing factors. The method that the
paper assumes three main factors the same weights is second best choice. Thus, several different
weights are supplemented to measure the distribution values of China’s APS.
Practical implications – China’s APS quantified by a modified approach and strong evidences can
be used to estimate the effect on economic growth. Policy effectiveness could be maximized at seeking
the endogenous benefit balance between strengthening IPP and promoting economic development.
Originality/value – The paper proposes a modified approach to measure the APS of China’s IPR,
and proves that the reinforcement of China’s APS is beneficial to promoting provincial economic
growth. However, at the outset, too strong IPP is harmful.
Keywords Intellectual property, Economic growth, Knowledge management,
Intellectual property law, China
Paper type Research paper
1. Introduction
After the establishment of WTO, under the dominance of the developed members, the
trade-related issues of intellectual property protection (IPP) are extended to broader
fields. China has been involved in the large numbers of IPP disputes. The IPP issues of
the developing countries have always been disputed. Some experts believe that it is
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This paper is supported by Chinese National Social Science Foundation Project (07BJY012),
MOE Project of Key Research Institute of Humanities and Social Sciences at Universities
(08JJD790138), and Project on International Competitiveness of Chinese Economy of Fudan
University 985’ Innovation Base. Discussions with Professor Shujie Yao, Dr Zhihong Yu of
Nottingham University, Jia Liu of Fudan University and two anonymous referees are gratefully
acknowledged.
JCEFTS
3,1
72
unwise for the developing countries in disadvantage of technology to enhance too early
their IPP levels. Ginarte and Park (1997) think that higher levels of protection are not
necessarily ‘‘better’’ at the outset. Maskus et al. (2005) argue that stronger protection for
intellectual property rights (IPR) alone is a necessary but not a sufficient condition for
raising technology innovation and economic development. Rather, the IPP system needs
to be strengthened within a comprehensive and coherent set of policy initiatives.
Furukawa (2007) shows that IPP may not enhance economic growth in an endogenous
growth model with costless imitation, and ‘‘stronger is always better’’ is incorrect.
However, other experts argue that strong IPP will promote the innovation capacity and
economic growth of a country. Wang (2004), IIPA (2005), Fink and Maskus (2005) have
confirmed that strong IPP has been shown to be the key engine in the growth of many
economies, and to be very important for developing economies to acquire foreign
country’s technology,attract foreign directinvestment(FDI), and develop theirown trade.
When evaluating the disputes of the effect of IPP on economic growth, we need to
quantify the IPP level of a country. Currently, there are few quantitative studies on the
level of China’s IPP. This leads to the great difficulty to explore the effect of China’sIPP
on economic growth. Thus, I choose patent protection as a case, improve the
measurement of nominal level and actual strength of China’s IPP, and examine the
effect of China’s IPP on provincial economic growth.
What patent protects is originality. The strength of patent protection reflects the IPP
level of a country. Rapp and Rozek (1990) find that the level of economic development
correlates closely with the level of patent protection. The countries with the stronger
patent systems experienced more rapid economic development. Rapp-Rozek’s approach
is convenient and simple, and is widely used. However, Rapp-Rozek’s approach cannot
reflect well the implementing situation of intellectual property laws of a country. In
addition, the use of integers is difficult to reflect really the discrepancies among the IPP
levels of different countries. After this, Ginarte and Park (1997) divide the indicator of
patent protection into five categories. Each of these categories was scored a value
ranging from 0 to 1. Hence,Ginarte-Park approach (for short, GP approach) deepens well
the score norms of patent protection level. GP approach has been acceptedwidely in the
world. Han and Li (2005) take the implementing strength of Chinese IPP into account,
and amend GP approach, and measure the implementing strength and the revised
protectionlevel of China’s IPPduring 1984-2002 (for short, HL approach).
This paper follows GP approach to measure the nominal level of China’s IPP,
constructs new indicators to measure the China’s APS during 1995-2007, and estimates
the effect of China’s APS on economic growth. This paper is organized as follows. The
measurement of China’s IPP level by GP approach is discussed in Section 2, and
according to HL approach, the implementing strength and the level of China’s IPP are
measured in Section 3. A modified approach is proposed in Section 4. China’s APS is
calculated by the modified approach, and compared with the results of GP’s and HL’s
approaches in Section 5. Section 6 aims at exploring the effect of China’s APS on
provincial economic growth. Conclusions and policy implications are in Section 7.
2. The measurement of nominal level of China’s IPP: using GP approach
To begin with, I use GP approach, and make an appropriate amendment, then use the
amended approach and the newest data to measure China’s IPP level. Following GP
approach, I divide patent law protection into five categories: extent of coverage,
membership in international p atent agreements, provisions for loss of protection,
enforcement mechanisms, and duration of patent protection. Then, I use these five
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