Being forced to adopt international treaties does developing countries more harm than good

Oregon Telegraph (ANI) Friday 17th September, 2010

A new study by an Oregon State University business professor, Ted Khoury, has found that developing countries, which adopt major international economic treaties under coercion do not necessarily gain more foreign direct investment.

The study, published in the online version of the Journal of World Business, said that in some cases, adopting these treaties do not help the developing countries, contrary to what agencies such as the World Trade Organization (WTO) espouse.

"Basically, I wanted to know when developing countries take on the rules of the wealthy, developed nations, do good things happen to them? And in many cases, the answer is no," Khoury, an assistant professor in OSU's College of Business, said.

The study has major implications for Latin American and Caribbean intellectual policy reform.

While looking specifically at the Paris Convention treaty, which was renewed in 1967, Khoury found that countries that did not have a significant invention and scientific research base did not financially benefit from adopting the treaty, and in some cases found their economic situations worsen.

He further pointed out that developed countries such as the United States encourage others to adopt the treaties because they want to be able to file their patents in countries where there may be a market for their product, or perhaps where there may be a manufacturing workforce to make the product.

As the inventor of more than 100 domestic and international patents, Khoury saw this issue come up frequently when he was filing for patents in other countries. Companies file international patents to protect their invention and make sure competitors in other countries do not copy the product; and they want to ensure that they can sell, market or manufacture the product overseas.

Looking at the data over a 14-year period in 18 Latin American and Caribbean countries, Khoury found that countries that adopted the Paris Convention early such as Colombia, Ecuador and Uruguay had an inflow of foreign direct investment when they increased innovation. However, early adoption did not increase investment in countries with the lowest innovation base like El Salvador, Honduras and Paraguay.

"Countries that do not adopt are threatened with sanctions and other types of coercion," Khoury said. "This explains why so many developing nations adopt treaties that are, quite frankly, not beneficial to them and in some cases only helps larger, multinational corporations within more industrialized countries," he added.

In many cases, he said, developing nations may see much larger economic benefits from delaying participating with economic treaties such as the Paris Convention and waiting until they have increased their domestic innovation base. (ANI)