Innovation is a central driver of growth. As a result, an increasing number of countries are seeking to become innovation leaders. Unfortunately, the methods that many choose are grounded in “innovation mercantilism”: a strategy that sees technology-based exports as the key to success while relying on distortive and protectionist tactics. These practices do not just damage other economies; they damage the entire global innovation system, leading to less innovation and productivity. Moreover, they often do not even help the countries embracing the practices; instead, mercantilist policies lead them to neglect the greater opportunity to spur growth by raising the productivity of all sectors of their economies, not just a few high-tech ones.
This first annual report documents what ITIF believes to be the ten worst innovation mercantilist practices proposed, drafted or implemented in 2013. Only one policy was chosen per country in order to document the pervasive nature of innovation mercantilism globally.
Summary of Worst Mercantilist Policies in 2013:
- China: Scuttled the Information Technology Agreement through a refusal to compromise.
- Vietnam: Implemented localization requirements on Internet service companies.
- Argentina: Expanded its “trade balancing” policies.
- Brazil: Prepared legislation that implements local data storage requirements for Internet service companies.
- Uruguay: Implemented local content requirements for the construction of wind farms.
- Russia: Initiated local content requirements for pharmaceutical production.
- India: Issued a patent denial for the cancer drug Glivec and a patent revocation for the cancer drug Tykerb.
- Australia: Prohibited overseas storage of electronic health records.
- Canada: Developed a trend of invalidating life science patents for a failure to fulfill the “utility” requirement.
- Ukraine: Listed by the United States Trade Representative as a Priority Foreign Country on the Special 301 Report.