Intellectual Property (IP) includes creations of mind such as innovations, inventions, ideas, technologies, designs, symbols. Intellectual property rights gives legal rights to the producer of the creation for a predetermined period of time, thus it restricts anyone else from utilizing that intellectual property for their purposes without prior acceptance of the creator or holder. The reasoning behind such a framework is to reward innovative ideas and for the progress of the society. In several parts of the world, IPR was initially subject to strong criticism, however, today it is much advocated due to the understanding of its long term benefits.

Article 2(viii) of the WIPO (World Intellectual Property Organization), states that ‘intellectual property’ shall include rights relating to- literary, artistic and scientific works, performances of performing artists, phonograms, and broadcasts, inventions in all fields of human endeavor, scientific discoveries, industrial designs, trademarks, service marks, and commercial names and designations, protection against unfair competition, and all other rights resulting from intellectual activity in the industrial, scientific, literary or artistic fields.[1]

Economic growth is undoubtedly one of the major reasons for the growth in study and importance of IP over these years, given the fact that enforcement of IPR is a fundamental component international economic trade. Multinational companies and firms have started to lay a great deal of importance on copyrights, patents and trademarks in order to protect their creations in the world market. In developing economies like India IP has created much needed job and has aided in increasing foreign direct investment. The government has thus time and again initiated plans for better understanding of IP among the people such as setting up of teams which can guide the businessmen regarding works that can be copyrighted and patented, availability of software. Thus indicates the efforts of government to increase foreign direct investment through this sector.  

Protection and enforcement of IPR is pivotal for promotion of greater transfer of technologies among the nations, which in turn paves the way for economic developments. It has been found through various researches conducted that countries with low GDP usually have a weak IPR enforcement, on the contrary, countries with higher GDP have high IPR enforcement. Because of this relation between GDP and IPR, countries with low GDP tend to suffer from lack of technological harms thereby impacting overall development of the country.

Intellectual Property is also fundamental for business personnel. In recent times, IP is the most valuable asset a person possess, for e.g., copyright over the works of author or composers of entertainment industry, trade secrets for the industrialists, trademark for s businessman, and patent for the innovators. Such increasing applicability of the IPR becomes more important given the fact that many foreign entrepreneurs are entering domestic market and also a lot of Indian industrialists move to different countries for opening their businesses.[2]

The reality is that such licensed innovation can either improve or deteriorate the monetary development targeted. In developing economies, a huge chunk of labor is employed in copying goods, when IPR is put into action in such countries, these laborers will lose their jobs and will have to find alternate options. The other problem faces due to IP is lesser access to technology or drugs which are patented. These problems pose a threat to introduction of strong IP rules, and policies in countries. IP laws sometimes lead to upsurge in prices due to monopoly, loss of jobs, etc. which compel the companies to pay royalties on products created by them. On the other hand it is argued that IP should be encouraged as it is valuable resource for the country. The question which arises at this point is why a strong intellectual property protection required in the functioning of economy? The answer to this question is that when the creations and innovations are protected, the investors get assured that they won’t fall prey to frauds and piracy. When patents are published, other firms use the technology invented or data produced to further the inventions, this creates a healthy environment for businesses to exist. Thus, by creating a framework to fight against temporary drawbacks of IPR, developing economies are now encouraging development of intellectual property by providing more support to research and development. The cumulative effect of small inventions can be fundamental in growth of knowledge and technology. Companies and enterprises in small economies should invest.

Since past 2 to 3 decades, India has been increasingly investing in protection of IP and made a number of changes in policies and regulations governing IP. In 1994, India signed the agreement of Trade Related Aspects of Intellectual Property Rights (TRIPS), because of which amendments were made to the Patents Act of 1970. Today patents are not only granted for methods but also for pharmaceutical products which has led to growth of economy. A report of WIPO shows that, pharmaceutical patent applications have increased after India amended patent laws. Pharmaceutical industry of India has grown from 6 billion US Dollar in 2005 to 30 billion US dollar in 2015 and it is expected to go up to 55 billion US Dollar by 2020.[3]  It has been observed that there is increase in investments by foreign companies due to advancements in the IP laws.[4] This not only leads to increase in investments but also increase in payment of taxes and employment opportunities for the people of India. Established multi-national companies are a proof to effects of intellectual property on the economy.

At present, India needs to shift its focus to inviting more and more MNC’s and start their research and development to increase the economy of India. Increasing number of nations have started to realize that there can be major consequences due to IP policies and that the stakes are high but today new ventures are ready to take risks. There is a tremendous shift in approaches of businesses today due to changes taking place in legality and business models. Thus it is fundamental to recognize the role played by IP and the status of IP laws. Enactment of IP laws in India is itself a major development in the market economy.