Innovation plays a pivotal role in economic development: this is a key lesson of the past decades. The build-up of innovation capacities has been central to successful growth experiences. Emerging and developing countries have recognised that innovation is not just about high-technology products, but that innovation capacity has to be built into the early stages of the development process to gain the learning capacities that will allow “catch-up” to occur. The adoption of foreign technology requires adaptation to the local context, which in turn implies incremental innovation. These countries also need innovation capacity to address developmental challenges specific to their local contexts, such as providing access to drinking water or eradicating neglected diseases.

Innovation plays a pivotal role in economic development: this is one important lesson of the past decades. The build-up of innovation capacities has been central to successful growth experiences. Intellectual property (IP) rights are important for building up those innovation capacities, and are even more pivotal in the knowledge economy where intangible assets are critical.

Innovation matters even in countries with less developed industrial conditions. Incremental innovations in activities beyond “knowledge-intensive” sectors can offer substantial opportunities for success. Examples include the successful exports of fish from Uganda, wine from Argentina and Chile, and medicinal plants from India. An exclusive focus on high-technology industries (“high-tech myopia”) can be costly if the potential for innovation in other sectors is ignored. Many opportunities for innovation have arisen in lower-technology sectors with high export opportunities, such as the production of palm oil and derivative products in Malaysia.

This chapter defines a framework to provide guidance on conducting country analyses for national intellectual property (IP) systems in middle-income countries with the aim of defining policy recommendations to promote innovation. It concludes that national IP systems can support innovation in these countries by creating exclusive rights for different groups of users. IP systems have to have legal and administrative conditions to guarantee those rights. Moreover, economic development contexts are characterised by multiple market failures where leading innovative firms and universities co-exist with a substantial informal sector and a large number of firms with low innovation capacities. If different users are to benefit from the national IP system, complementary support policies are needed as well as a focus on types of IP beyond patents. Successful reforms of national IP systems will also depend on a high level of co-ordination to implement an effective IP for innovation agenda.

Colombian firms and research institutions use intellectual property (IP) much less to protect inventions than their regional neighbours and most OECD countries. Only some universities and a few large firms file for international patents. Lack of skills, weak research infrastructure and low levels of business innovation capabilities contribute to weak performance. IP policy therefore must be embedded in a broader set of innovation policies. Recent reforms have considerably improved legal and administrative conditions. More has to be done to assist a wider group of innovators in identifying how IP can serve their business activities. Researchers need further support to engage in spin-offs and public universities to co-operate with industry. Expert support services should also be expanded. Colombia’s Intersectoral Commission for Intellectual Property (CIPI) could be enabled to play a significant role in pushing the “IP for innovation” agenda forward.

Indonesia needs to develop its innovation capacities if it is to sustain growth and address key social challenges. Intellectual property (IP) policy can become a powerful policy tool to support these efforts if effective co-operation with actors involved in IP policy is achieved. Indonesia’s businesses and research institutions are currently weak users of IP notably of patents and utility models. Legal and administrative reforms are needed to improve the quality of the IP system. Efforts must also be taken to include smaller entities and businesses in remote geographic areas. Traditional knowledge protection and geographical indications can permit the inclusion of a wider group of innovators, but will require investments aimed at generating economic value on their basis. IP policy also has to focus on commercialisation by resolving the legal uncertainty about the licensing of IP generated from public funding sources and implementing effective support programmes and services.

IP plays a particularly important role in knowledge economies where knowledge, more than physical capital and labour, is an essential factor of economic growth.