CHAPTER 10
THE KNOWLEDGE AND TECHNOLOGY STRUCTURE
Overview:
In today’s world, wealth and power often flow from access to and control of knowledge and technology. In
this chapter we examine the creation and diffusion of knowledge and technology. Who controls these processes and
how?
We begin by defining terms. What is the knowledge structure? Who are the main actors in it? What is the
nature of technological innovation? We first look at the political economy of information. We then consider the
notion of dynamic comparative advantage—the idea that countries can create comparative advantage given
sufficient access to knowledge and technology. We examine how developed countries try to foster innovation
through a variety of policies affecting technology, research, and skilled workers. We also explain how aspiring states
try to close the knowledge gap with developed countries, often by moving up the “value chain” to capture more
profit in the global economy.
We define four types of intellectual property rights (copyrights, patents, trademarks, and geographic
indications) and discuss their role in controlling access to knowledge. Do these rights further the development of the
world market, thereby enhancing the benefits of specialization and trade? Do these rights provide a basis for national
advantage in a struggle for wealth and power among nations? Or, do these rights limit the transfer of technology to
developing countries, thereby deepening their dependency?
The efforts of the United States and Europe to control the flow of technology beyond their borders using
trade laws and the WTO are examined in detail. These efforts include enhancing the international protection of
intellectual property rights.
Efforts to harmonize the treatment of intellectual property rights across national boundaries and conflicts
between developed and developing countries regarding this process are also considered. We analyze different
perspectives on IPRS among economic liberals, mercantilists, and structuralists. We also contrast views on IPRs
among constructivists, “balancers,” and “abolitionists.”
Learning Objectives:
• To identify and explain four important trends about knowledge and technology that have become apparent over
the last twenty years.
• To explain the meaning and significance of the international knowledge structure.
• To explain how the knowledge structure overlaps and interacts with the production, finance, and security
structures.
• To understand the global arenas in which the struggle over information occurs.
• To distinguish the kinds of government policies used to nurture innovation and knowledge-based industries.
• To explain the kinds and significance of intellectual property rights (IPRs).
• To examine how nations create comparative advantage and how this process is related to moving up in global
“value chains” to gain more profit in knowledge-intensive activities.
• To explain how mercantilists, liberals, structuralists, constructivists, and “balancers” differ in the ways they
either justify or criticize intellectual property rights.
• To discuss what specific actions the United States has taken to protect IPRs.
• To understand significant North–South conflicts over IPRs.
• To analyze the political and economic forces behind expansion and protection of IPRs in international
agreements and negotiations.
• To explain how IPRs have affected the ability of poor countries to respond to the AIDS crisis, protect traditional
knowledge, and promote geographical indications.
Chapter Outline:
INTRODUCTION
a) The Pirate Bay saga is one of many examples of high-stakes global struggles over knowledge and
technology.
b) Four important trends regarding knowledge and technology have emerged in the past twenty years.
1. Wealth and power increasingly depend upon knowledge and technology which are shaping the future
of competition, freedom, and security.
2. The pace of technological change has increased.
3. Knowledge is harder for any one country to control or monopolize.
4. There are growing struggles between owners and users of intellectual property.
THE INTERNATIONAL KNOWLEDGE STRUCTURE: ACTORS AND RULES
a) The international knowledge structure is the set of relationships that govern access to knowledge and
technology around the world.
b) The knowledge structure impacts trade, security, and finance because each of these IPE structures is
increasingly influenced by or dependent upon technological factors.
c) The rules affecting knowledge include national laws, international agreements, business practices, and
shared norms.
d) Main actors affecting the knowledge structure include individuals, companies, states, and international
organizations.
THE IPE OF INFORMATION, INNOVATION, AND TECHNOLOGY ADVANCEMENT
Information: A Double-Edged Sword
a) The proliferation of social media has opened up new forms of national and cross-border communication
b) Regimes have fought back through control and suppression of information using advances in technology.
c) Democratic and authoritarian regimes are also using technology to collect and manipulate information.
d) The digital revolution also allows private corporations to gather unprecedented amounts of consumer
information that can be used in ways contrary to the public interest.
e) New information technologies allow international organizations (IOs) to more easily monitor states’
compliance with their international obligations to protect the environment, public health, and human rights.
f) Control of information has important implications for the exercise of a country’s soft power and protection
of commercial interests overseas.
BOX: Wikileaks
a) Wikileaks documents give an unvarnished, behind-the-scenes look at the conduct of war, diplomacy, and
foreign policy.
b) The WikiLeaks saga has demonstrated the ability of a small group of cyberactivists and whistleblowers to
use digital technology to easily spread unprecedented amounts of sensitive information that threaten a
country’s national security, undermine a TNC’s reputation, or potentially endanger the lives of individuals.
Government Innovation Policies in Developed Countries
a) Technological growth is a key determinant of economic growth.
b) States have a large role in fostering and controlling research and development.
c) States foster innovation and knowledge-intensive industries through: public spending and subsidies;
regulation; controls on technology exports; and intellectual property rights enforcement.
d) The United States and the European Union have aggressively tried to build knowledge-based, competitive
economies.
e) Knowledge is a double-edged sword: states want to gain by spreading it and its products but also want to
prevent rivals from gaining too many advantages, especially with military and high-tech knowledge.
f) Geopolitical and economic changes since 1990 have weakened the West’s technological oligopoly.
Closing the Knowledge and Technology Gap
a) High-tech (knowledge) industries are termed “Schumpeterian” to indicate that only firms with monopoly
power have the incentive and ability to invest in risky, expensive and long-term.
b) Product innovation involves the creation of new goods and services. Process innovation involves the
development of more efficient ways to produce existing items.
c) The product life cycle and global value chains illustrate how innovations arise, spread, and eventually are
transferred abroad. The production structure is strongly impacted by the changing trade patterns that result.
d) Japan, and then Taiwan and Korea, set the example for how to move up the value chain to capture more
profit.
Struggles over Education and Skilled Workers
a) Innovative societies need well-educated and skilled professionals who can create innovative businesses and
generate valuable intellectual property.
b) The United States has harnessed foreign knowledge by attracting able students to its institutions of higher
education.
c) A changing global economy forces the United States to compete with India and China and others more than
ever for the best foreign students and skilled workers.
d) U.S. ethnic scientific communities are important to innovation and commercialization of products in high–
tech and professional fields.
THE IPE OF INTELLECTUAL PROPERTY RIGHTS (IPRS)
a) The Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement of the WTO requires
countries to provide a minimum level of IPR protection and enforcement. IPRs are government-granted
rights, often for a limited amount of time, to control the use of an invention, a creative output, or the name
of a product or company.
b) Patents are issued by a government and confer the exclusive right to make, use, or sell an invention for a
period usually of twenty years (counted from date of filing).
c) Copyrights generally allow the owner to prevent the unauthorized reproduction, distribution, and sale of
original work.
d) Trademarks are signs or symbols (including logos and names) registered by a manufacturer or merchant to
identify goods and services.
The Politics of IPRs in Developed Countries
a) Firms have played a major role in elevating the protection of IPRs to a major foreign policy issue,
especially a network of individuals and companies mostly in the software, video, music, agricultural
chemicals, and pharmaceutical industries.
b) IPR issues have been important in the GATT Uruguay Round negotiations and in the TRIPs agreement and
WIPO.
c) Under U.S. trade law, the government can act unilaterally against countries that fail to protect IPRs
adequately.
d) There has been a concerted effort among developed nations to reach agreements to “harmonize” IPR laws
across national boundaries.
e) Geographical Indications (GIs) have emerged as a new bone of contention between the Old World and
the New World. Europe especially wants strong GI protections.
North–South Conflicts over Intellectual Property Rights
a) Many LDCs disagree with current practices regarding trade-related IPRs. They argue that current TRIP
provisions strengthen the monopoly power of large firms.
b) Copyright abuses are another important North–South issue.
c) Developing countries have enunciated an alternative understanding of the goal of IPRs as promotion of
development. Along with many development agencies and NGOs, they assert that provisions of TRIPS that
hamper development should be resisted and that new development- enhancing policies should be
incorporated into IP laws.
Debates over Patented Medicines
a) Some of the most successful efforts to challenge the TRIPS agreement have been in the areas of
compulsory licensing and access to medicines.
b) There is hope that a combination of more generics, more compulsory licensing, more voluntary cooperation
by Big Pharma, more foreign funding, and more flexibility in IPR laws can make essential medicines more
accessible throughout the world.
Box: Patient Rights versus Patent Rights
a) Many South African AIDS victims cannot afford high-priced patented drugs.
b) South African laws permit access to cheaper AIDS drugs.
c) US pharmaceutical firms threatened legal action against South Africa.
d) The WTO resolved that poor countries are allowed to import generic versions of patented medicines from
countries like India and Brazil.
Struggles over Traditional Knowledge
a) An IPR struggle between South and North is over Traditional Knowledge (TK), which is the accumulated
knowledge and practices of indigenous or local communities as they relate to such things as plants, plant
uses, agriculture, land use, folklore, and spiritual matters.
b) Just as developing countries seek to valorize their control over biodiversity and medicinal plant uses, many
countries are also trying to protect TK from appropriation and misuse by non– indigenous groups.
Perspectives on Intellectual Property Rights
a) Liberals view strictly-enforced IPRs as necessary to create a mutually beneficial market for intellectual
property, thus encouraging firms to invest in new innovations that result in people having access to new
products.
a. Mercantilists view IPRs as a way to try to gain an advantage for domestic firms over foreign competitors
and sometimes as a way to limit the spread of military-based technology that can be important to national
defense.
b) Structuralists view IPRs as yet another means of exploitation of the periphery by the core. Strictly enforced
IPRs produce underdevelopment and dependency.
Alternative Perspectives on Intellectual Property Rights
a. There are complex and overlapping points of view on IPRs from the constructivists, “balancers,” and
“abolitionists.”
b) Constructivists trace over time how we define IPRs and talk about them; by so doing, we better understand
whose interests in society are being served by this discourse.
c) “Balancers” want to strike an appropriate balance between individual rights, communal rights, and national
rights. Balancers want to prevent IPR holders from stifling competition, misusing monopoly rights, or
excessively suing individuals or companies for alleged infringement.
d) “Abolitionists” want to see the elimination or radical reduction of IPRs.
CONCLUSION
a) There is greater recognition by some economic liberals that too many IPRs can have negative consequences
for competition, innovation, and a vibrant public domain.
b) Key questions concerning the knowledge structure include: How will the forces of globalization affect the
creation, control, and dissemination of knowledge? Will stricter enforcement of IPRs enhance or hinder
development among the poorest nations of the world? Will competition among nations for new
technologies lead to a new era of economic nationalism?
Key Terms:
• Intellectual property rights (IPRs)
• Research and development (R&D)
• Schumpeterian industries
• Global value chains
• Trade-Related Aspects of Intellectual Property Rights (TRIPS)
• Patents
• Copyrights
• Trademarks
• Geographical indications (GIs)
• Publicity rights
• Claw back
• Compulsory license
• Traditional Knowledge
Teaching Tips:
• The first part of this chapter looks at the increased importance of knowledge and technology in the IPE today,
drawing examples from each of the chapters already covered in this section (making this a good point to review
the ways that IPE structures overlap and interact). The second part focuses more narrowly on IPRs.
• While both parts of the chapter are important, individual instructors should feel free to emphasize either the
policies to promote information control, knowledge acquisition, innovation, and technological development
(first part) or the politics of IPRs (second part), depending upon personal interests, background, and training. In
any case, do not be afraid of the more technical aspects of U.S. policy regarding IPRs.
• Students will benefits from gaining a clear understanding of the differences between different kinds of
intellectual property. Moreover, class discussion is enhanced by debating the relative merits of strong versus
weak protection of IPRs. Point out that IPRs are not just about economics or legal issues; they affect culture,
human rights, the creative potential of individuals, and the rights of indigenous peoples.
• Students may be unaware of the many ways in which states try to foster innovation and knowledge- based
industries through direct funding, IPRs, export controls, and immigration and education policies. You might
want to debate in class what students think is the appropriate role of the government in fostering innovation, and
whether state interventions discussed in the first half of the chapter are consistent with economic liberal
principles.
• Access to medicines is a particularly good issue to show how patents affect developing countries. Encourage
students to identify other cases where there are tradeoffs between immediate social goals and the need to
maintain long-term incentives for innovation and creativity.
• A stimulating way to generate discussion about trademarks is to have your class watch the 2010 Oscar- winning
short animated film Logorama, in which police chase a criminal through a city plastered with more than 2,000
trademarked corporate logos. The 17-minute film raises many questions about the dominance of trademarks in
our lives. Discussions on copyrights that appeal to students can focus on popular music, illegal downloading of
music and movies, and mashups. Two provocative documentaries are Copyright Criminals and RIP: A Remix
Manifesto.
• Use popular news items in class to point out sometimes hidden struggles involving such things as NSA
surveillance, corporate logos, counterfeiting, and gene patenting. You might also peruse IP-related blogs to find
engaging IP cases to share with the class. For example, check The Hollywood Reporter’s Hollywood, Esq. blog
at http://www.hollywoodreporter.com/blogs/thr-esq. See also Bloomberg’s daily intellectual property news at
http://topics.bloomberg.com/intellectual-property.
• Have students read some State Department cables released by Wikileaks and report on what they contain.
Sample Essay-Discussion Questions:
1. What are Intellectual Property Rights (IPRs) and why are they important in today’s global markets? Briefly
compare and contrast the mercantilist, liberal, and structuralist views on IPRs.
2. What four trends have become apparent over the last 20 years regarding the role of knowledge and technology
in IPE? Explain.
3. Trade-Related Aspects of Intellectual Property Rights (TRIPS) is a controversial agreement. Why?
4. How can a nation create comparative advantage in knowledge-intensive industries? What roles are played by
governments and private businesses?
5. What differences over IPRs are there between the United States and other developed countries?
6. Discuss U.S. policies to protect IPRs. Why does the United States have such a strong interest in these issues?
Explain.
7. In what ways do the governments of democratic countries try to control information dissemination? Must
citizens give up a significant amount of privacy in the digital revolution and during the war on terror?
Sample Examination Questions
1. The product life cycle is a description of the way that
a) products become old and outdated.
2. IPRs are an important issue for LDCs because
a) they need technology transfer for economic development.
3. Which of the following is a generic term the EU is trying to “claw back” to protection as a geographical
d) Vidalia onions
4. What do we call a state grant to a local party such as a private company or government body, with or without
the consent of the right holder, to produce and sell a good under patent?
a) parallel import
5. Which of the following statements would an economic liberal probably agree with?
a) Technological laggards need to fight for more “policy space” in IPRs.
6. What is the triple helix?
a) a regime to strengthen patents, copyrights, and trademarks
7. Which of the following is NOT a government innovation policy in developed countries?
a) controls on technology exports
8. Which of the following are examples of efforts by developing countries to advance their interests in the face of
strong IPRs?
a) turning a blind eye to counterfeiting of foreign goods
9. Which of the following is probably the least controversial intellectual property issue?
10. Which of the following is posited as an important trend in the knowledge structure over the last twenty years?
a) Human capital and technology are becoming less important than control of land and natural resources for
11. Which of the following statement is correct?
12. Which information policy would a structuralist probably favor?
d) Filtering access to politically– sensitive information on the Internet
13. One big idea Raymond Vernon is known for is
d) arguing that technological laggards need to fight for more “policy space.”
14. Which statement about copyrights is correct?
a) They confer exclusive rights over an invention for 20 years.
15. Which statement reflects the position of a “balancer” on IPRs?
d) Very little IPR protection is necessary to create an incentive for innovation.
Part III: STATES AND MARKETS IN THE GLOBAL ECONOMY
11 The Development Conundrum: Choices Amidst Constraints
12 Toward a More Perfect (European) Union
13 Moving into Position: The Rising Powers
14 The Middle East: The Quest for Development and Democracy
Part III of the book presents four case studies of IPE: the developing nations, the European Union, the
“rising powers” such as Brazil, India, and China, and the Middle-Eastern and North African states. Each of these
chapters focuses on different themes and issues related to the development process, integration, the adoption of
markets in former socialist or communist states, and the country’s or region’s relationship with the rest of the world.