Patenting Prosperity

CAMBRIDGE: Most people are aware of the huge inequalities of income that now separate the developed and developing world. Fewer people recognize that the gaps between rich and poor in terms of science and technology are even larger than the gaps in income.

While rich countries account for around 16% of the world's population, and around 60% of the world's purchasing power, they account for around 99% of the patents for new inventions granted by the United States and Europe in recent years. If we are serious about narrowing the income gaps between the rich and poor, we had better think seriously about how to raise the outputs of science and technology directed at the problems of poor countries.

In today's world, economic prosperity comes not from natural resources or production of industrial goods such as coal and steel, but from the production of new ideas and new products. The dynamic U.S. economy owes its great advantage to a tremendous capacity to innovate – whether in information technologies such as computer hardware and software, or biotechnology such as new medicines and crop varieties, or new telecommunications technologies such as advanced fiber optics and earth satellites.

The world's poorest countries, by contrast, hardly innovate at all. As a result, many of them rely on exports of primary commodities with little change in the composition of exports or their methods of production year after year, or even decade after decade. Thus, many tropical countries continue to live off of the same mix of coffee, tea, cacao, bananas, or mining products that they did a generation ago. In the case of many of these commodities, world prices have declined sharply during the period (at least relative to the cost of imports), but the poorest countries lack the flexibility and innovative capacity to shift to new types of production, much less to produce entirely new products not previously seen in world markets.