347. This delegation would like to thank the proponents for their communication titled "Intellectual Property and Innovative: Inclusive Innovation and MSME Growth". While there is no doubt that IP may be valuable and may contribute to economic development and growth, there are many factors that determine whether IP protection may create appropriate conditions that enable MSMEs to effectively exploit IP. MSMEs are a hot topic globally, but especially in South Africa, where the National Development Plan (NDP) stipulates that 11-million jobs need to be created by 2030 – 90% of these by SMEs.
348. From a definitional perspective, there is no common understanding of what constitutes MSMEs. There is no common global or regional definition in this respect. Generally, developed countries' definitions of MSME generally encompass much larger enterprises than developing countries' definition of MSMEs. In the European Union for example, any company with less than 250 employees is considered a MSME. In most African countries, a company with more than 100 employees is a large company. MSMEs are almost by definition registered enterprises. In other words, the informal sector is usually not covered. However, large parts of economic activity in developing countries occur in the informal sector. South African organisations are classified as 'small' when they have fewer than 50 employees and 'medium' when they have fewer than 200 employees
349. IP rights are important, however MSMEs are affected by a whole host of factors that put them at a disadvantage with larger firms, especially in the developing world. Moreover, IP rights are only useful to businesses if they can use IP protection to generate innovation, this requires financial resources that MSMEs might not possess. In this way, IP may only serve the largest firms, unless complementary policies are in place. Furthermore, IP rights can only be realised if firms have access to critical ingredients for innovation such as finance, human capital, knowledge and infrastructure.
350. Strengthening and extending IPR regimes and enforcement are strongly advanced by countries at the cutting edge of innovation globally. One can understand that, for those countries, it is of strategic value to use IP protection as a mechanism to preserve the rent-generating and other advantages that arise from the technological capabilities built up by their firms.
351. In the history of development and 'catching up', successful strategies always appear to have involved 'emulation' that requires measures that are targeted at acquiring knowledge in increasing returns activities. Furthermore, all successful catching-up episodes occurred under condition of weak IPR regimes that permitted easier access to knowledge and acquisition and imitation. During the 19th Century, today's advanced economies used the IP system and the flexibility it accorded as they pursued their industrialisation objectives. This allowed those countries to strengthen their IP regimes at their own pace, and in support of overall progress in their economic development.
352. There are arguments that patents are unlikely to foster innovation in developing countries at early stages of industrialisation. The evidence on the extent to which patent protection, which is of particular relevance in the context of industrial policies, contributes to encouraging innovation is, at best, inconclusive.
353. South Africa has had a long history of IPR protection and, as signatories of the WTO, we have adopted and implemented all our obligations under the TRIPs Agreement. As we review our IP policy, we are seeking to ensure that appropriate balances are struck in providing protection for innovation and ensuring that benefits are shared in society. In particular, we are interested in ensuring that the IPR regime in South Africa supports our wider development objectives and underpins our efforts at industrial development objectives.