This week, the U.S. Chamber of Commerce’s Global Innovation Policy Center (GIPC) debuted its first Innovation and Creativity Access Barometer, which offers a new, unique and invaluable resource for political leaders, policy makers, scholars and citizens worldwide.
Amid our increasingly knowledge-based and internationally competitive global economy, innovation accounts for a greater and greater share of any nation’s growth, wealth and wellbeing. Simply put, it’s either innovate or stagnate. By quantifying, measuring and comparing nations’ commercial access to innovative and creative works, the report spotlights which policies work, which policies don’t work and which path leads to improvement.
Importantly, the Barometer also serves as a wothy companion to, and extension of, the GIPC’s annual Intellectual Property Index.
Published since 2012, that Index measures the degree to which nations across the world protect intellectual property (IP) rights. It ranks nations’ respect for patents, copyrights, trademarks and trade secrets, then statistically correlates nations’ IP protections with their respective levels of prosperity. To illustrate, it’s no coincidence that the prosperous United States, United Kingdom, Sweden, France and Germany claim the top five positions in the most recent IP Index, whereas impoverished Ecuador, Pakistan, Egypt, Algeria and Venezuela occupy the bottom five.
In that vein, the annual IP Index also reveals that nations with strong IP protections are twice as likely to produce and export knowledge-intensive products, they enjoy over 50% more high-skilled and highly-paid employees, they experience 53% more research and development activity, they attract 39% more foreign investment, they produce 500 more high-value inventions per million citizens and they attract 30% more venture capital and private equity funds, as well as other economic advantages.
It should come as no surprise that for the seventh consecutive year since the IP Index’s debut, the U.S. again held the world’s top ranking in protecting IP. In fact, we actually improved our score over last year, which helps explain why our economy continues to thrive amid a broader global economic slowdown. Since America’s inception, we’ve protected patents, copyrights, trademarks and trade secrets like no other nation by design. Our Founding Fathers deliberately protected IP rights in the text of Article I of the Constitution, which reads, “Congress shall have the Power … To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”
As a direct result, as we’ve often noted, no nation in human history remotely rivals America’s record of innovation, influence and prosperity. No nation matches our legacy of invention, from the telephone to powered flight to the internet. No nation matches our legacy of artistic achievement, from cinema to music to television. And no nation’s trademarks can claim the instant worldwide recognizability that such American logos as Coca-Cola or Apple possess.
Today, IP-intensive industries account for an astonishing 40% of total U.S. economic output, as well as approximately 30% of all U.S. jobs – 45 million in total. American IP sectors also account for more economic output than the entire economy of any other nation in the world except China’s.
Accordingly, both current reality and historical experience confirm the direct relationship between IP and prosperity.
As the GIPC’s new Innovation Barometer also demonstrates, however, protecting IP isn’t always enough:
[A] growing body of evidence suggests a positive link between the strengthening of intellectual property rights and economic growth and development, job creation, technology transfer, and increased rates of investment and innovation. Many countries have recognized this reality and made intellectual property rights central to their economic development strategies. The Barometer shows, however, that these same countries have often undone a considerable share of the benefit from strong intellectual property policies by restricting the access of their citizens to the foreign products of intellectual property … Many economies have laws in place that protect the intellectual property rights of foreign and domestic producers alike, while failing to enable the access of their citizens to resulting technological breakthroughs at the same level. Consumers are left with fewer choices and less ability to enjoy the latest technologies.
For example, nations that otherwise protect IP rights might nevertheless engage in such destructive and interventionist policies as price controls, import and foreign investment restrictions, government-imposed licensing terms and regulatory approval barriers for innovative products like pharmaceuticals. And consumers ultimately pay the price.
The good news is that, as with IP protections, the U.S. leads the GIPC’s Innovation and Creativity Barometer as well. Compared with other developed nations, we simply don’t engage in the same degree of counterproductive government interventionism.
The bad news, however, is that too many U.S. political and policy leaders seek to import other nations’ destructive public policies to our shores, rather than export our more beneficial market policies to their shores. Amid our ongoing healthcare policy debates, for example, proposals to impose drug price controls and pharmaceutical patent restrictions pose direct and immediate threats to U.S. innovation and consumer welfare.
Fortunately, the new GIPC Innovation and Creativity Barometer offers a straightforward, quantifiable guide toward policy courses that will maintain America’s standing as the world’s most innovative and creative nation. The question is whether our political leaders and electorate will heed its lessons.