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TWN
Info Service on Intellectual Property Issues (Sept24/03) Geneva, 27 Sep (D. Ravi Kanth) — The Geneva-based World Intellectual Property Organization (WIPO) on 26 September said that there is a continued drying up of investment in research and development (R&D), including a considerable drop in venture capital funding across member countries, amidst worsening geopolitical and geo-economic tensions, as well as the fragmentation of global supply chains. In its 316-page “Global Innovation Index 2024″ report, WIPO has ranked Switzerland, Sweden, the United States, Singapore, and the United Kingdom as being the world’s most innovative economies. It said that China, Turkiye, India, Vietnam, and the Philippines are “the fastest ten-year climbers.” According to the report, China reached the 11th position and remains the only middle-income economy in the Global Innovation Index’s top thirty countries. In terms of the performance of countries on capital spending on innovation region-wise, the report said that: (1) Singapore, Korea, and China are the top performers in South-East Asia, East Asia, and Oceania; (2) India, Iran, and Kazakhstan are the leading performers in Central and Southern Asia; (3) Israel, the United Arab Emirates, and Turkiye are the top performers in Northern Africa and Western Asia; (4) South Africa, Botswana, and Senegal are the best performers in Sub-Saharan Africa; (5) Switzerland, Sweden, and the United Kingdom are the leading performers in Europe; (6) the United States and Canada are the top performers in Northern America; and (7) Brazil, Chile, and Mexico are the best performers in Latin America and the Caribbean. The WIPO Director-General, Mr Daren Tang of Singapore, said that “R&D (research and development) expenditures decelerated” in the global landscape in 2023, and “the number of scientific publications fell, and venture capital investments returned to pre-pandemic levels, including in Africa and Latin America.” He expressed concern over the continued “tighter financial conditions” and their adverse impact on “innovation investments in the near term.” In the foreword to the report, he wrote that there are “some rays of light,” as “new innovation in Digital and Deep Science” continued to “power progress, with significant developments in areas like genome sequencing, computer power, and electric batteries.” According to Mr Tang, there is a continued trend of strong progress from emerging economies such as Indonesia, Mauritius, Saudi Arabia, Qatar, and Brazil in the GII. A drop in innovation, which has a direct impact on patent filings, could lead to a drop in revenues for WIPO. It is understandable that the global watchdog of intellectual property is concerned about the dip in innovation activity across countries. In his remarks at a press conference on 26 September, Mr Tang said that on the positive side, one can see that perhaps there’s a flight to quality, which “means that maybe companies are more focused on R&D and investors are more focused on enterprises that are able to produce something of value.” But on the downside, he said that the deceleration in innovation could be that it leads to an overall drop in investment in innovation. Innovation needs investments, he stressed, adding that “it needs financing in order to be able to bring that idea to market.” According to Mr Tang, “what we’re seeing in terms of some figures is that venture capital investments are down by 10% in terms of volume” while “in terms of the value, it’s down by 40%.” Consequently, there is a considerable drop in R&D expenditure, he suggested. Portraying a rather grim picture, the DG said that “the growth rates are at a decade low at 5%,” adding that WIPO predictions indicate that the growth rate could further plummet to 3%. On the positive side, he said that there is good technological progress in certain key areas, especially those connected to climate change. He maintained that the green energy cost is declining, as battery prices are down 14%, solar down 4%, and wind down 3.5%. On the pharmaceutical side, he said drug approvals have gone up close to 10%, which means that there are more drugs in the pipeline. The “big picture”, according to Mr Tang, is “uncertainty and some clouds, some storms, but bright spots ahead and hopefully, the drying up in the financing of innovation means more of a flight to quality rather than an overall drop.” Incidentally, the release of the WIPO report on 26 September coincided with the Financial Times reporting on the ongoing US federal investigation into Hone Capital, a Chinese venture capital fund based in Silicon Valley, a development that has highlighted the potential end of the road for Chinese venture capital funds operating in the US. QUESTIONS When asked by this writer at the WIPO press conference about WIPO’s somewhat grim assessment of the state of play in innovation across countries, and the rather disturbing developments in the US where Chinese venture capital funds are being seemingly persecuted on alleged charges that they passed off trade secrets, Mr Tang said, “we aren’t as dramatic as you in framing the world, and “no”, we don’t think it’s a case where this is the end of innovation because of geopolitical tensions.” “But what we are seeing is more of the connection between macroeconomics, which is [that] interest rates have risen, the money supply has dried up, and what happens therefore is that there’s less money being poured into research and development,” he said. The DG said: “I don’t think it’s anything connected to any particular companies or anyone … We’re looking at global trends at WIPO… We don’t look at just one company or two companies. We’re looking at the global flow of investment.” While he acknowledged that there are “some difficulties because of the drying up of money, my take on it, I’m a bit more optimistic compared to Sasha (the lead economist behind the report). Sasha is an economist, [and] economists by nature see a glass half [empty] and then they see it empty.” “I’m a lawyer,” the DG asserted, arguing that “I see the glass as half full. Maybe that’s just my temperament.” He continued: “I think some of this drying out of money supply could mean a flight to quality. And internally we have discussions to know whether that’s a good or bad thing. I think a flight to quality is not necessarily a bad thing, which means that if in the past people were investing in everything that had [been] promised, now they are a little bit more careful at seeing whether that promise would really play out in the long run. So I don’t see this as necessarily negative. And I think the larger trend that [we] must bear in mind is that more and more countries, as Sasha says, are putting effort into innovation, research, entrepreneurship.” To another question concerning the seemingly low per capita outlays for innovation in India, which is ranked as the best performer in Central and Southern Asia, the DG went on to praise India. “And I was in India last year, and I had the chance to see for myself.” He said, “I think that there’s a lot of effort at the ground level, at the grassroots level in India, as well as at the policy level, right, to promote innovation and entrepreneurship.” The DG cautioned against measuring innovation on the basis of per capita outlays, suggesting that “India is probably the most populous country in the world.” “So, when you take everything by per capita, right, India always seems to be in a tough spot,” he added. “I would say that, in fact, in terms of global patent filings, India has reached number six in the world,” Mr Tang said. “And I think that’s really quite an achievement, right, and these things take time.”
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