Respect for intellectual property rights is a means of enticing investors for developing countries. "Low-rated countries with improving intellectual property rights prosper. High-rated countries with declining property rights stagnate," Leon Louw, executive director of the Free Market Foundation told an intellectual property rights conference in Johannesburg yesterday.
"If you want to be rich and prosperous you have to respect property rights, otherwise sophisticated industry simply goes elsewhere where they can get better protection. If you are an innovator you are not going to move into a country that does not respect intellectual property rights," said Louw.
Douglas Lippoldt, senior economist and policy analyst at the Organisation for Economic Co-operation and Development, said that if countries have weak intellectual property rights it means the rights' holders could battle to get the full returns from the use of their intellectual property, or they could risk the abuse of their intellectual property by a competitor.
"There is huge competition for foreign direct investment now and failure to establish adequate protection for intellectual property rights can be to a country's detriment," said Lippoldt.
"If there is a secure environment (companies) are more willing to licence (their intellectual property) to unaffiliated parties."
One of the major features of India's economic reform was its protection of intellectual property rights, said Louw.
"They attracted the pharmaceutical industry from South Africa, and international designer labels are manufacturing in India. India has clamped down on piracy."
Upholding the rule of law, and protecting property rights are the two most significant factors in supporting prosperity, said Louw.