International Economy
International Economy
International Economy
COMPILED BY :
FACULTY OF HUMANITIES
B. Problem Formulation
- What is the structure of international knowledge?
- What is the definition of IPE?
- What is the information related to IPE / IPR?
- How is IPR in the international political economy?
- What are some theoretical perspectives on IPR?
- What is the politics of IPR in developed countries?
C. Objective
- Know the structure of international knowledge
- Know the definition of IPE
- Know information related to IPE / IPR
- Knowing IPR in the international political economy
- Know several theoretical perspectives of IPR
- Understand IPR politics in developed countries
BAB II
DISCUSSION
In this section we will examine how countries are trying to encourage innovation and turn
knowledge into comparative advantage in the global economy. We find that countries play a
considerable role in coordinating research and development with market players. Some
developing countries are closing the knowledge gap with richer countries while capturing a
larger share of global production, but the United States and the European Union are struggling to
continue attracting the world's best talent.
The historical and theoretical question is this: What is the appropriate role for
governments and market actors in encouraging innovation? A number of political economists
such as Joseph Stiglitz, Ha-Joon Chang, and Dani Rodrik believe that countries need the
flexibility to design policies that are in line with their respective national needs. When it comes
to knowledge governance, they argue that there is no one-size-fits-all approach. Some countries
try to replace the private sector in research and development, some collaborate with the private
sector in various ways, and some simply remove obstacles in the way of private innovators. Most
countries want to nurture those who turn technological innovation into profitable exports. Some
great powers are willing to spread knowledge throughout the world by educating foreigners at
their universities and encouragingoutsourcing by their multinational companies. But at the same
time many countries are determined to stay one step ahead of competitors in innovative fields,
including military technology.
Technologically advanced countries play in the global game "keep-up" not "catch-up".
They want to remain competitive in knowledge-based industries and maintain "creative
industries,". Some of these leading industries include telecommunications, biotechnology, health
care, and defense. Innovation is often based on political openness, broad educational
opportunities, labor mobility, and another characteristic that only a limited number of countries
can quickly turn to their advantage.
Governments often identify new research and development needs and provide resources
for major leaps in areas such as energy and medical research. This can be done with direct
funding to universities, government research laboratories and private companies. Sociologist
Henry Etzkowitz emphasizes how this funding can produce atriple helix
university-industry-government relationships that accelerate innovation. For example, the
Bayh-Dole Act of 1980 granted patents to US universities and federal laboratories for inventions
funded with public money and licensed those patents to private companies. Examples of
government-assisted innovation at US universities include Google online search (developed at
Stanford University) and hurricane tracking radar (developed at MIT).
Following this, innovation researcher Mariana Mazzucato has presented some of the most
compelling arguments for the critical role of the state in driving innovation. He believes that
public investment in research has been the source of some of the most important technological
breakthroughs since the 1950s in fields such as computing, aviation, biotechnology, green
energy, and nanotechnology. Countries often take on the role of entrepreneurs, diverting
government spending, venture capital, and loans to visionary projects with high risks but
potential long-term benefits for society. For example, in 1958 the US government created an
agency within the Department of Defense called the US Defense Advanced Research Projects
Agency (DARPA) to fund research by industry and universities on technologies useful to the
military. Technology-derived products from its research support include the Internet, virtual
memory, computer networking, integrated circuit design, and speech-to-text conversion software.
After World War II, the US federal government funded about two-thirds of all US
research and development, but in recent years this number has fallen to just a quarter as private
industry increases its own investment. In European Union countries, the government funds
one-third of all research and development, while in Russia the government accounts for 70
percent of all research and development. For more than fifty years, the United States has led the
world in total combined public-private research and development. In 2013, the US accounted for
27 percent of total global research and development spending, compared with 20 percent by
China, 10 percent by Japan, and 6 percent by Germany.
Mazzucato laments that while the government bears most of the risk in funding basic
research, it is private companies that reap all the profits by commercializing the products derived
from this research. Like many others, they argue that large amounts of state-funded research and
development will be vital to developing green technologies to prevent threatening climate
change; about 50 percent of total renewable energy research and development spending
worldwide comes from public institutions.
Italian economists Daniele Archibugi and Andrea Filippetti also warned that
"privatization of research activities and knowledge" increases can reduce long-term growth and
innovation. OECD countries now rely on the private sector for more than two-thirds of total
research and development spending. Archibugi and Filippetti argue that private companies often
avoid basic research that leads to radical breakthroughs, focusing on profitability rather than
important social needs, and slows down knowledge sharing with patents and trade secrets. Many
scholars also argue that ".financialization"developed economies are detrimental to technological
innovation.
Governments advance technological progress in many ways other than just research and
development spending. Scholars Jakob Edler and Luke Georghiou argue that public procurement
has become an important way in which governments create demand for innovative products. Tax
refunds to consumers and businesses who purchase innovative products also encourage
accelerated product commercialization. Since 2004, Germany has accelerated the development of
renewable energy by guaranteeing solar and wind power producers above-market prices for the
energy they contribute to the grid. Japan adopted a similar pricing system in 2012 to deploy
renewable energy sources after the Fukushima disaster led to the closure of nuclear power plants.
By requiring licenses and approvals for certain export lists, the United States has tried to
limit the transfer of technology to its competitors. When sharing advanced technology with close
allies such as Japan, the United Kingdom, and Germany, the United States sought to ensure that
it also limited its re-exports. This requires close multilateral cooperation, especially among
NATO members, to harmonize all its export controls.
In recent years, the Committee on Foreign Investment in the United States (CFIUS), an
interagency group that examines proposed foreign investments in the United States for potential
national security risks, has rejected several purchases of Chinese companies in the United States.
In 2016, CFIUS rejected an attempt by Chinese investors to buy LED lighting company
Lumileds, which was later taken over by a US private equity fund. CFIUS is believed to be
concerned that the sale would give China access to technology about a material called gallium
nitride that could be used to make advanced microchips with military applications. That same
year, Chinese companies attempted to buy US chipmakersFairchild Semiconductor and some
hard drive manufacturers Western Digital failed because they expected to be rejected by CFIUS.
The United States' impulse was to use national security reasons as a pretext for "defensive"
mercantilism. However, it is worth noting that China also uses similar national security
arguments. After Edward Snowden leaked documents about the NSA survey, China began
putting pressure on banks, state-owned enterprises, and state institutions to replace foreign-made
computer software and servers with Chinese-made ones.
However, geopolitical and economic changes since the 1990s have weakened the Western
technology oligopoly. As French political scientist Hugo Meijer suggests, since the collapse of
the Soviet Union, the United States has had much less control over the transfer of dual-use
technology to China. He identifies four main factors causing this trend: "the weakening of
multilateral institutions governing export controls, the commercialization and global diffusion of
technology, China's growing innovation capabilities, and domestic pressure to liberalize export
controls resulting from increasing Sino-American economic ties." Private companies at the
forefront of information, communications and satellite technology need to find export markets
for dual-use products to remain profitable. Export controls hamper their ability to compete
globally. According to Meijer, in a balance between economic interests and national security, US
lobby groups are promoting technology exportsdual-use defeated the "Obstacle Controller"
group.
Economist Joseph Schumpeter (1883–1950) believed that only firms with a certain
amount of monopoly power might have the incentive and ability (in the form of monopoly
profits) to invest in risky, expensive, and long-term research and development projects.
Therefore, he argues that many industries will likely have a monopoly structure. However, over
time, technologically bold newcomers will displace the once dominant companies.Gales of
Creative Destruction predict, will destroy established monopolies and create new dominant
companies.
Because of economies of scale, competition in many industries today is not for market
share but for the market itself. Competition is a proposition"winner takes all"or at least"winner
takes most", as Schumpeter hoped. This reality has clear political-economic implications.
Mercantilistically minded policymakers will establish industrial policies to encourage the
development of national champions that dominate high technology-based industries. Liberally
minded policymakers recognize the importance of creating favorable conditions will promote
entrepreneurs who are able to compete in the knowledge industry conditions described in
Michael Porter's bestselling book,The Competitive Advantage of Nations. The ability to acquire,
create and control technology has become central to international competition in the 21st century.
Even if countries cannot hope to have globally dominant firms, they strive to advance
technologically in the global value chain, which includes "all the activities undertaken by firms
and workers to take a product from its conception to final use and beyond" . Many companies are
connected in a global division of labor in which Western companies engage in high-value
functions such as finance, basic research, design, and marketing, while developing countries
perform low-value functions such as low-wage manufacturing and materials processing. raw.
Developing countries want to move up the value chain of more profitable activities, but to do so
they need to close the technological gap with developed countries by acquiring knowledge.
Taiwan and South Korea have followed Japan's example in improving their position in
the value chain by creating national champions through deliberate industrial policies and
strategic trade policies. Their companies shifted from manufacturing or assembling parts to
technology development and product design. Eventually, they became leaders in several
industries, collecting patents and controlling their own brands.
China is following the Japanese and Korean models in creating national champions. In
2015, President Xi announced an ambitious program "Made in China 2025" designed to make
China a technological power in industries such as aviation, robotics, semiconductors and electric
vehicles. The program encourages national companies to conduct more research and
development and buy high-tech assets abroad. Foreign companies complain that initiative"Made
in China 2025” is protectionist because it gives unfair preferential treatment to Chinese
companies in government finance and procurement.
In the context of an innovative society, investment in research and development and the
existence of strong institutions are of paramount importance. However, the success of innovation
also depends greatly on the availability of an educated workforce and skilled professionals.
Higher education plays a crucial role in preparing a workforce that meets the needs of industries
that rely heavily on knowledge. In addition, labor movements, both regionally and
internationally, also influence the progress of innovation in a society, as can be seen from
regional technology centers such as Silicon Valley and the Research Triangle.
Increasing international labor mobility, especially foreign students studying abroad, has
become an important factor in driving innovation in several developed countries. Countries such
as the United States, Canada, and the United Kingdom compete to attract talented foreign
students to their universities. However, there are challenges such as adjusting visa policies
post-Brexit and competition to attract highly educated immigrants is becoming increasingly
fierce amid growing anti-immigrant sentiment.
Additionally, visa programs and immigration policies also play an important role in
determining a country's attractiveness to global talent. This also impacts the startup ecosystem,
technology transfer, and overall economic progress. Developed countries must strike a balance
between attracting foreign talent to enrich human capital and protecting the interests of the local
workforce.
Patents grant exclusive rights to make, use, or sell an invention for a certain period,
which encourages companies to invest in research and development. Although the criteria for
obtaining a patent vary, patents are generally granted for inventions that are new, useful, and not
obvious to a person skilled in the art. In exchange for a temporary monopoly, the inventor must
reveal the details of his invention to the public, allowing for the further development of
knowledge. Apart from that, patents also function as an indicator of a country's technological
innovation. Patent activity in various countries provides a rough picture of the level of
technological innovation in that country. Countries such as South Korea, Japan and China
showed significant increases in the number of patent applications, signaling their commitment to
fostering innovation and technological development.
Copyright is a right that protects the expression of ideas, covering works of art such as
books, films, music and software. Typically, copyright allows owners to prohibit the
unauthorized reproduction and distribution of original works. The WTO TRIPS Agreement
requires copyright protection for at least the lifetime of the author plus fifty years in protecting
the expression of ideas in various forms of artistic works and software. However, there has been
criticism of the long duration of copyright, even though the copyright industry in the United
States makes a significant contribution to GDP each year.
The government establishes exceptions to copyright to allow certain uses of protected
material without seeking permission or paying royalties, such as in the case of fair use for
criticism, parody, or teaching. The first sale doctrine also facilitates the return or rental of legally
obtained physical copies of copyrighted items. Thus, the conclusion of the paragraph is that
copyright plays an important role in protecting works of art and software, while considering the
balance between the rights of the owner and the public interest in accessing and using these
works.
With the definition and forms of intellectual property rights (IPR) above, 5 key theoretical views
about IPR and their impact on the global knowledge structure.
1. The economic liberal perspective highlights the fundamental role of intellectual property
rights (IPR) in encouraging innovation, ensuring the efficient use of resources, and
linking effort to rewards in the market system. IPR protection is seen as an incentive for
companies to invest in research and development, as well as ensuring that creators can
earn sufficient profits to recoup those investments. In addition, IPR enforcement is
expected to produce higher quality and safer products for consumers, as well as attract
more foreign investment and technology transfer to countries that protect their
intellectual property rights.
Thus, the economic liberal perspective emphasizes the importance of IPR mechanisms in
creating an environment conducive to innovation and economic growth, while providing
incentives for creators to continue to contribute to the development of knowledge and
technology. It also underscores the close relationship between IPR protection, product
quality, foreign investment, and technology transfer, all of which are considered
important factors in the formation of an efficiently functioning and inclusive market
system.
3. Racesstructuralist argues that developed countries use intellectual property rights (IPR) to
secure their global economic dominance by monopolizing markets and gaining excessive
profits from developing countries. The capitalists who control IPRs are considered
monopolists and international cartels who are not interested in fair competition, but are
more inclined towards rent-seeking and litigation. Carolyn Deere Birkbeck highlights the
unequal distribution of global cross-border royalties on intellectual property licenses,
most of which benefit only ten developed countries.
Economic geographer Christian Zeller adds that capitalists seek to control and
commodify the intellectual creativity of various parties, including researchers, skilled
workers, and rural communities, by transferring profits to capital and licensing
companies. The structuralist perspective also emphasizes that global IPR regulations are
often used by developed countries to strengthen their economic dominance.
4. Constructivists hold the view that social views regarding intellectual property rights
(IPR) are the result of a social construction process, where society's values and interests
are influenced by shared discourse that is built over time. Constructivists highlight how
the definition and discussion of IPR has been shaped by powerful economic interests,
which depict intellectual property as the property of individuals that must be protected.
They also show that narratives about IPR are often structured to support specific political
and economic agendas, such as linking intellectual property theft to threats to national
security.
Additionally, the balancing perspective advocates for limitations on the length and scope
of IPRs to prevent the accumulation of excessive power in the hands of large corporations
that could hinder growth and create higher inequality. They reject the concept of a
"permission society" that forces individuals to constantly ask for permission and pay to
access cultural products. Instead, they promote the idea of preserving vast public domains
so that everyone can benefit from cultural resources freely. In an effort to fight for better
balance in the IPR system, the balancer also supports the open science movement which
encourages the reduction of patents and the free circulation of scientific publications.
One of the debates in intellectual property rights (IPR) between countries in the South
and North is regarding traditional knowledge. Traditional knowledge refers to the knowledge and
practices that have developed among indigenous peoples related to plants, plant use, agriculture,
folklore, and spiritual matters. Indigenous peoples around the world have gained a deep
understanding of the physical environment and the plants used for food and medicine. Through
harvesting and breeding practices, they have also developed a wide variety of crops.
Not only that, many of the major food crops in North America and Europe actually
originate from these local communities. However, companies in Northern countries often
appropriate this traditional knowledge for their own purposes. Countries such as Brazil, India,
the Philippines, and Indonesia are now demanding that those wishing to discover local plants
with compounds that can be used in medicine must obtain permits, acknowledge the source of
ingredients that are then patented, and share the benefits with local communities that originally
relied on them. this traditional knowledge.
This struggle also includes protecting traditional knowledge from misuse by
non-indigenous groups. Several countries in the South are attempting to grant copyrights to
folklore and indigenous works of art to their indigenous peoples. All of this is an effort to
provide new cultural rights to indigenous peoples and protect traditional knowledge from misuse,
because traditional knowledge is an important part of ensuring the continuity of knowledge and
cultural heritage from generation to generation.
CHAPTER III
CONCLUSION
Traditionally, countries have funded basic scientific research and fostered companies that
produce breakthrough technologies. However, in recent years, financial processes may have
weakened US companies' commitment to investing in long-term innovation. Meanwhile, China
and other countries in Asia are determined to become technological powers to reduce
dependence on Western multinational companies. Universities in the US, UK and Canada
continue to attract many of the brightest students from around the world. Countries strategically
use visa policies to attract skilled workers and wealthy entrepreneurs in the global talent race.
That Intellectual Property Rights (IPR) protection has risen to the level of a major foreign
policy concern for the United States, Europe, and Japan is not surprising. Knowledge structures
clearly constrain actors' choices and shape their behavior. This influences which countries will
turn innovation into higher productivity, greater market share, and increased exports. It also helps
determine the distribution of benefits by shaping prices and productive capacity. The debate
regarding IPR will continue for many years. There is greater recognition by some economic
liberals that too many IPRs can have negative consequences for development.