U.S. Statement at UNCTAD’s 54th Trade and Development Board

Delivered by Ann Low, First Secretary
U.S. Mission Geneva
October 4, 2007

The Least Developed Countries Report 2007

The United States recognizes that poverty is a grave challenge facing our global community. The Least Developed Countries lie at the heart of this challenge. It is in the interest of all nations to assist LDC efforts to expand economic opportunities and alleviate poverty.

We very much appreciate the theme of this year’s Least Developed Countries Report. The global economy has become a knowledge economy. We agree that Knowledge, Technological Learning and Innovation are essential to development. We applaud UNCTAD’s work on the essential contribution that science, technology and engineering can make to trade and development.

This year’s LDC report contains some high-quality analytical work that will be useful to developed and developing countries alike in crafting their policies.

The report addresses some important topics, such as market linkages, innovation policies, Intellectual Property Rights, and economic assistance. It is useful to have a dialogue on all of these topics, but in the interests of time, we would limit our remarks today to two subjects from the 2007 LDC report.

First, we would like to express our thoughts on the concept of technological learning and ther term “catch-up” used in this report.

Creating conditions conducive to a knowledge base and technological capacity requires policies that promote learning, creativity, scientific exploration and, most importantly, innovation. In concert, an enabling economic and regulatory environment is required to effectively exploit the benefits of technology and knowledge. As Least Developed Countries work to improve their enabling environments, they will be better positioned to build capacity in these areas.

We believe that the need for an enabling economic and regulatory environment is not sufficiently highlighted in this year’s LDC report, which uses, sometimes misleadingly, the phrase “catching up.” Although other sections of the report better define this term, the Executive Summary of the report seems to suggest that “catching up” is independent of the business climate and the enabling environment, and can be correlated with technological products rather then with processes or knowledge.

The report provides some excellent examples of policies to promote innovation, but would be even more useful by focusing on best practices and positive examples of technology transfer and creative solutions, such as the adoption mobile phones. Mobile phone technology has broad applications in improving productivity and knowledge in virtually any sector - agriculture, construction, retail, service, transport, and more. Mobile phones caught on in developing countries because, in most cases, few barriers existed to prevent their use and an indigenous capacity existed to use them.

Mobile phones also show that the concept of “technological catch-up” can be anachronistic when new technologies allow economies to leapfrog old technologies, in this case telephone land lines. As the report points out in several places, technological progress is not always linear or sequential, as the term “catch-up” implies. Each economy needs to adapt technology to local conditions and find ways it can be applied, which vary depending on the needs, industry and market.

The report correctly notes that, although technology is widely agreed to be a factor in economic growth, the real issue for development is neither technology itself nor access to it, but rather the regulatory policies, infrastructure, and human capital needed to maximize that technology. However, the importance that must be given to an enabling regulatory environment is buried in the report when it should be highlighted. This is particularly problematic because many policy makers will only read the Executive Summary, which does not accurately reflect the message of the report.

Second, we would like to address the chapter on Intellectual Property Rights.

Intellectual property rights protections are central to the enabling environment for innovation, and are critical to providing incentives that motivate people to invest in both adaptations and new discoveries. While the nature and scope of IPR protections in LDCs needs to be carefully balanced during the early stages of development, strong protections are ultimately needed to spur domestic innovation. Intellectual property rights and their enforcement are an important part of sound economic policy.

The report correctly identifies the challenges associated with the role of IPR in fostering economic advancement in LDCs. These challenges have been acknowledged directly by the United States and other WTO Members, notably through the generous transition periods granted to LDCs in connection with implementation of the provisions of the TRIPS Agreement.

The United States agrees wholeheartedly with the report’s statement that intellectual property rights must be regarded “not as an end in themselves, but as a means for development, growth and poverty reduction.” However, this report adopts an overly narrow and judgmental set of conclusions that, in our view, will not contribute to meaningful progress in working through the complexities surrounding IPR and LDCs.

We firmly believe that strong IPR systems encourage innovation. Those incentives in turn produce significant leaps forward in economic development. The Report correctly notes that “learning” and skill building – human capital development - are crucial in LDCs. In time, these countries will also need strong legal structures in place to motivate their own scientific and technological innovation.

Assurance that intellectual property will be protected is also important for foreign partners who frequently provide technology and knowledge development in LDCs.

Furthermore, reliance on alternative methods to provide incentives for innovation using subsidies or “commons” models will ultimately not be as effective as IPRs in motivating entrepreneurial activity and harnessing the power of economic enterprise that drives innovation and economic growth.

There is a legitimate discussion to be had about ways in which the international community can maximize prospects for IPR to advance development objectives. That discussion is not meaningfully advanced by unsupported conclusions that current IPR systems automatically hinder development.

The United States is committed to working with UNCTAD, the WTO, WIPO, and other relevant institutions to help bring about a stronger and more stable consensus on ways to pursue most effectively the IPR-development nexus. We hope that, in the future, UNCTAD’s contributions to this debate will reflect a more balanced approach in collating opinions and an openness to a greater range of views on these complex matters.

Knowledge, Technology, Engineering and Innovation are increasingly important on a global scale and are critical in fostering economic development. We again thank UNCTAD for its thoughtful report. We look forward to its continued work and we reiterate our recommendation that more attention be given to ensuring that the Executive Summary accurately reflects this useful report’s important conclusions.