Implications of the WTO-TRIPS Agreement from a national innovation systems perspective: The pharmaceutical industry in Egypt

This thesis analyzes the implications of the WTO-TRIPS Agreement for the pharmaceutical industry and public health sector in Egypt using a national system of innovation (NSI) approach. My main arguments are (i) that there is no robust method for determining the appropriate balance between innovation and technological diffusion, which subjects IPRs policy to political influence rather than economic calculation; (ii) that attempts to establish positive links between strong IPRs and research and development, foreign direct investment, trade and technology transfer through the use of conventional economic models have yielded few conclusive results; (iii) that adequately understanding the implications of stronger IPRs for the pharmaceutical industries of developing countries requires an examination of relevant aspects of their respective national systems of innovation.; Historically, Egypt had maintained a relatively lax pharmaceutical patent regime that was effective in expanding local manufacturing capabilities and stimulating competition. However, the development of key elements of the NSI that was necessary to enable the industry to move toward greater innovation was largely neglected. Thus, while the industry managed to capture a significant share of the local market, its growth remained heavily dependent on the imitation of foreign technologies. In order to curb competition in the 1990s foreign firms began to press the government for immediate changes to the IPRs regime. Although these demands were rejected, Egypt's accession to the WTO-TRIPS Agreement ensured that IPRs would soon be strengthened.; The choice to delay implementation of the Agreement reflects concerns over the appropriateness of its standards given the country's weak innovation and institutional capabilities. The industry's low levels of R&D and heavy reliance on technology licensing have been reinforced by its limited ability to draw on the support of the science and technology system, which itself is characterized by weak R&D efforts and poor financial services. These problems, together with the absence of effective technology and competition policies, present serious challenges to the industry's ability to benefit from stronger IPRs. Under these circumstances, the new IPRs regime is expected to act as little more than a rent transfer mechanism from local pharmaceutical producers and consumers to foreign titleholders.