An innovation economy through partnership

Thaddeus Burns
Head of Life Science Government & Public Affairs, Merck KGaA
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Technology. We all want more of it, regardless of how much – or little – of it we already have. We want it because we are certain that building an innovation economy translates into superior local jobs and an improved quality of life.

An innovation economy requires the uptake and development of new and effective technology solutions, which in turn depends on a solid foundation of technical knowledge. Building technical knowledge is crucial for all countries – and it’s no simple undertaking. It requires long-term public investments to develop a skilled and adaptable workforce, requiring significant financial commitment. It also requires the right partners.

While it may in theory be possible to acquire the intellectual and financial capital totally independently, most cannot. Even if a country could muster the necessary resources to achieve this alone, such an endeavour would be impractically slow and expensive.

It is the use of global supply chains that brings down the price of new technology. And the ability to advance technology in a high-quality and cost-effective manner is directly proportional to a country’s willingness to partner with foreign and domestic innovators – incorporating both local and external inputs. Thus, collaboration, together with investment in human capital, is the most direct approach for a country to improve its technical knowledge base and, ultimately, become an innovation powerhouse.

So how can a country gain access to the knowledge needed to cultivate an innovation economy? The right policy framework is critical. Policy-makers are responsible for supporting home-grown innovators and facilitating their ability to compete, as well as establishing their markets as fertile ground for investment and collaboration with technology partners.

Robust intellectual property rights are part of attracting the best partners, whether local or from across borders. Intellectual property rights enable innovators to manage their investments in developing and commercializing new technology solutions. These rights are only valuable to the extent they exist and can be enforced.

A stable IP regime is the underpinning of an open and collaborative environment that respects the need of all innovators to control their own destiny. Such a regime encourages local research as well as high-tech imports by creating predictability for innovators and enabling them to recoup their investments upon realizing success in the marketplace. But, without meaningful IP rights, innovators have nothing to give, sell or license. They may be unwilling to share what they know if their know-how can’t be protected, especially if there is a high likelihood it could end up in the hands of a competitor.

In addition to upgrading the knowledge base, partnership can stimulate the development of solutions that are tailored to a specific market or that enhance the abilities of a local workforce. Countries that establish and maintain reliable trade secret protection, in addition to other forms of IPR, recognize the value know-how contributes to advancing technology – ensuring collaborators can freely share insights with their partners. When information can flow freely, the advantages of partnership can be most fully realized, since each participant can fully understand the consequences or the context of their actions.

Collaboration can take many forms, with some models for upgrading technical capacity more effective than others. Unfortunately, some of the most ubiquitous approaches actually slow down the transfer of knowledge. For example, when government procurement discriminates in favour of domestic innovation, it can deter the players with the best technology from introducing their solutions locally. Similarly, local content requirements can force providers to deliver less competitive products. Given a large enough market and the right policy framework, local production and even research often emerges as the most economical choice. But arbitrary percentages of locally built content or resources may lead to deploying a workforce before the local labour has capacity to do so, ultimately decreasing quality and increasing cost.

Developing an innovation infrastructure is a gradual, long-term process. It cannot be accomplished overnight or by force. Yet, many governments set up policies that force technology to be transferred, or proprietary know-how to be disclosed, as a condition of market access without the necessary protections from public disclosure. And even when such strategies are not outwardly employed, a weak trade secret regime can threaten an innovator’s ability to protect know-how.

The consequence of each of these policies is to frustrate exchanges between collaborators. Technology advances less quickly when information cannot be confidently shared between partners. And when enterprises sense the market interferes with their investment returns, they will either avoid the market or shield their technology from disclosure, minimizing the amount of valuable knowledge they communicate externally.

Our first, human instinct is to protect ourselves – to protect our jobs and resources and to become self-reliant. These are worthy objectives. At the same time, we need to resist our protectionist instincts in order to succeed in a today’s distributed innovation context.

Today, the best solution might not be the local solution. But by nurturing local talent and expanding their knowledge base through investment and partnership, it might be in the future. Building a prosperous economy, one with the potential to grow jobs and exports, requires policy frameworks that support importing innovation with the talent to absorb it. Only then will the potential of an innovation economy be unleashed.

Author: Thaddeus Burns is Senior Counsel, IP and Technology Policy, EMEA and Latin America, at the General Electric Company.

Image: Patents are displayed at the World Intellectual Property Organization REUTERS/Denis Balibouse
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