IP protection in the Global Competitiveness Report 2012-13

Last Wednesday the World Economic Forum, a Swiss non-profit foundation based in Cologny, Geneva, which describes itself as "an independent international organisation committed to improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas", released its annual Global Competitiveness Report (GCR). 

The GCR defines competitiveness as the set of institutions, policies, and factors that determine the level of productivity of a country. The level of productivity, in turn, sets the level of prosperity that can be earned by an economy. The productivity level also determines the rates of return obtained by investments in an economy, which in turn are the fundamental drivers of its growth rates. In other words, a more competitive economy is one that is likely to sustain growth.

As in previous years, this year’s top 10 remain dominated by a number of European countries, with Switzerland, Finland, Sweden, the Netherlands, Germany, and the United Kingdom confirming their place among the most competitive economies. Along with the USA, three Asian economies also figure in top 10, with Singapore remaining the second-most competitive economy in the world, and Hong Kong SAR and Japan placing 9th and 10th.

As clarified by the relevant Wikipedia entry, since 2004 the GCR "ranks the world's nations [this year the Report featured a record number of 144 economies] according to the Global Competitiveness Index ["GCI" - this is a comprehensive tool that measures the microeconomic and macroeconomic foundations of national competitiveness] and is made up of over 110 variables, of which two thirds come from the Executive Opinion Survey, and one third comes from publicly available sources such as the United Nations. The variables are organised into twelve pillars, with each pillar representing an area considered as an important determinant of competitiveness." 

The GCI and its 12 pillars

Intellectual property protection is considered by the GCR as relevant to both the first and twelfth pillars. 

Attracting affluent foreign investors is not
easy if you don't have good institutions 

The first pillar concerns the institutional environment. This is "determined by the legal and administrative framework within which individuals, firms, and governments interact to generate wealth.” As one can imagine, the quality of a country’s own institutions is mirrored in its competitiveness and growth, in that it influences investment decisions and the organisation of production, and also plays a key role in the ways in which societies distribute the benefits and bear the costs of development strategies and policies. Among the other things, the GCR highlights that “owners of land, corporate shares, or intellectual property are unwilling to invest in the improvement and upkeep of their property if their rights as owners are not protected."

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The twelfth pillar relates to innovation. This “can emerge from new technological and nontechnological knowledge. Non-technological innovations are closely related to the know-how, skills, and working conditions that are embedded in organisations.” Innovation is said to be 

“particularly important for economies as they approach the frontiers of knowledge and the possibility of generating more value by only integrating and adapting exogenous technologies tends to disappear. Although less-advanced countries can still improve their productivity by adopting existing technologies or making incremental improvements in other areas, for those that have reached the innovation stage of development this is no longer sufficient for increasing productivity. Firms in these countries must design and develop cutting-edge products and processes to maintain a competitive edge and move toward highervalue-added activities. This progression requires an environment that is conducive to innovative activity and supported by both the public and the private sectors. In particular, it means sufficient investment in research and development (R&D), especially by the private sector; the presence of high-quality scientific research institutions that can generate the basic knowledge needed to build the new technologies; extensive collaboration in research and technological developments between universities and industry; and the protection of intellectual property, in addition to high levels of competition and access to venture capital and financing".

The Report therefore includes an assessment as to how intellectual property is protected in the various countries taken into consideration. Also here, the top 10 are dominated by European countries (Finland is ranked 1st), but there are significant exceptions, these being Singapore (2nd) New Zealand (3rd) and Qatar (8th).

Individual rankings can be accessed here (select "Series" and then "Intellectual Property Protection").