INTELLECTUAL PROPERTY RIGHTS FOR THE INFORMATION SOCIETY

Market Economies and Rule of Law
As has been remarked before, the U.S. economy is becoming lighter, with less weight of product per unit GDP. Alan Greenspan, in this presentation, characterizes the economy as becoming more “conceptual”. He states, “as a result of the increasing conceptualization of our GDP over the decades, the protection of intellectual property has become an important element in the ongoing deliberations of both economists and jurists. Of particular current relevance to our economy overall is the application of property right protection to information technology…….If our objective is to maximize economic growth, are we striking the right balance in our protection of intellectual property rights? Are the protections sufficiently broad to encourage innovation but not so broad as to shut down follow-on innovation? Are such protections so vague that they produce uncertainties that raise risk premiums and the cost of capital? How appropriate is our current system--developed for a world in which physical assets predominated--for an economy in which value increasingly is embodied in ideas rather than tangible capital? If the form of protection afforded to intellectual property rights affects economic growth, it must do so by increasing the underlying pace of productivity growth. The bulk of this increase should show up as multifactor productivity, that is, the segment of labor productivity that reflects the impact of conceptualization--ideas generally--on economic growth and standards of living. Finding a way to isolate the effect of, say, the length of patents on overall economic growth poses a formidable challenge. The more general challenge is to develop a framework that fosters the growth of an economy increasingly dominated by conceptual products.” Remarks by Alan Greenspan at the 2003 Financial Markets Conference of the Federal Reserve Bank of Atlanta, Sea Island, Georgia (via satellite), April 4, 2003.