Patent Institution, Innovation and Economic Growth in China

The patent institution is regarded as an effective way to stimulate innovation, facilitate technological dissemination, promote trade and enhance competitiveness (Idris 2003). However, by granting exclusive property rights, the patent institution creates a monopoly which in itself results in the loss of social welfare by impeding the use and development of the patented technologies by others (Drahos 1995, 1999). Therefore, the overall role of the patent institution in promoting economic development, especially for developing countries characterised by a generally low technology level, is rather ambiguous, and depends on facts that vary from case to case.