What Drives Global Productivity? Technology And Property Rights

About five hundred years ago, generations that lived apart did not experience any major change in their standard of livings. Global productivity was very low and man was generally poor. Yes, there were empires and kingdoms, but on average the world was on static economic expansion.


But with emergence of mass penetrated technology, things began to change. The industrial revolution was a quintessential moment in modern history. Technology brought productivity and man became richer. Standard of living on average improved. It remains till today that when technology penetrates en mass in any economy, national productivity improves, and living standards advance.


There is another caveat to this argument. Intellectual property right (IPR) is a cardinal part of this productivity. Without it, technology will not improve and innovation is stalled. The old world was an era of absence of IPR and that contributed to a no small measure to the lack of wealth creation. Sure, people invented things in arts, engineering, but there was no wealth created. Lack of IPR prevented meaningful market success in one major way. It prevented the pursuit of innovation since ideas could be stolen and commercialized with no penalty. The return to innovation was very low. That was why the world had many Inventors and few innovators.


Yes, we read about inventors that developed nearly all the engineering principles in use today. They had ideas, bright people and created prototypes. They were celebrated as icons and legends. But many died very poor. They could not transition from inventors to innovators, not because of market issues, but because lack of IPR made it difficult to attract funding since there was no guarantee to success. No funding, no mass commercialization and no human impact. In our contemporary time, the legendary venture capitalists will tell you that if you want to get them involved, you need to have a protected intellectual property.


Two things changed the world: technology and most importantly IPR. Between the two, IPR was more important. Why? Without it, we would still be celebrating inventors with no impact on human lifestyles (just note that I respect inventors; I am one myself since I have filed my own patents).


That brings me to the African challenge. In many parts of the continent, the IPR there is still like the one that existed 500 years ago. It does mean that Africa cannot prosper, if my logic is correct, until they get a practical and working IPR. It does not matter how much aids and loans they get from foreign agencies. Without IPR, nations cannot innovate and without innovation, any economy dies a natural slow death. IPR is the catalyst that drives national technology policy, making it implementable and sustainable. You cannot have a better technology policy than a strong IPR. With strong IPR, inventors could become innovators. Without it, everyone sits on his/her ideas and the nation suffers on productivity.


In essence, Global Productivity = Technology + IPR, and productivity translates into good standard of living. When nations cannot create technology, the LHS of the equation suffers. Also, if they have no IPR, that suffers more. See the reason why Africa is not making progress? It is an illusion when boys and girls in Accra, Lagos, and Nairobi use pirated foreign software, and think they are smart. They never know that it would have been better if their nations have laws to prevent such illegality. With such laws, they have an opportunity of not needing those foreign software by developing their own and selling them locally, profitably. In the absence of the IPR, they cannot do business because immediately they release software in the market; it appears in all shops illegally. After three months, they close their shops! It is a vicious cycle that makes innovation difficult in Africa since no guaranteed return exists. Why invest your hard earned money when there is no law to protect your creations? Why do research? You see why our businesses prefer to import and distribute than create things?


Last year in Lagos, I hosted a workshop for some technology entrepreneurs. Everyone wanted to know how to improve the business climate. I was not interested in the electricity problem. I told them that the biggest problem is lack of IPR in Nigeria. When boys hawk Microsoft Vista for N300 (about $2) openly and no one arrests them, no major creative business can incubate in that land. I told them that without a strong enforceable IPR law, someone will eat into their ideas and they may not succeed, especially if they plan to start making things. My advice to the group was to ask government to enforce existing laws and enact new ones where applicable. I told them it would be difficult for them to have international partners since no one can risk his/her IPR in Nigerian market. Sure, who cares what he says? Alas, one emailed me few days ago explaining how IPR issues prevented him from concluding a partnership with a Chinese firm.


Let me stop now. In conclusion, Africa must strengthen its IPR even as it pursues new technology policies.

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