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'Open trade to grow'

May 22, 2003 13:02 IST

Openness to trade played an important role in promoting innovation, said T N Srinivasan, professor of economics at the Yale University and one of the most respected commentators on India's liberalisation process.

Speaking on the interaction between entrepreneurship, innovation and growth at the World Bank conference on development economics, Srinivasan pointed out that openness had a positive effect because innovation increased with trade.

Developing countries learned to imitate products of developed countries, which were forced to step up innovativeness, he said.

Some argue that protection of intellectual property is an incentive to innovation, but Srinivasan said there had been little impact of protecting intellectual property rights on innovation, except in the case of pharmaceuticals.

"It was a big mistake to muck up intellectual property rights with trade," he said.

"Hopefully, during the current round of trade negotiations, trade-related intellectual property rights will go back to where it was before the Uruguay Round, to WIPOR," he added.

How does structural change, which creates new economic activity and growth, operate in low-income countries? Robin Burgess and Anthony Venables of the London School of Economics said the process was frequently lumpy, resulting in rapid growth in some regions.

Spatial inequalities tended to increase during periods of rapid economic development, they pointed out.

BS Bureau in Bangalore