Economic Growth, According to our textbook, we learned from the Solow model that better ideas are key to economic growth long term. “Economic growth requires institutions that encourage investment in physical capital, human capital, and technological knowledge (ideas).” (Cowen, 2018) By investing in new and innovative ideas, you are also investing in the future of your economy. One way a country can support innovative ideas is by setting patent laws in place and giving people an incentive to earn an income from their ideas. It is possible for new ideas to become obsolete if too many people are trying to profit off of the same idea. A patent is a government grant of temporary monopoly rights, typically 20 years from the date of filing (Cowen, 2018).
This means that patents delay copycats from being able to use or monetarily profit off of the same idea. This allows the patent holder to monopolize on their idea before anyone else can get in on it. There are currently eleven countries in the world that do not have patent laws in place; Afghanistan, Eritrea, Maldives, Marshall Islands, Micronesia, Myanmar, Palau, South Sudan, East Timor, Somalia, and Vanuatu (Hoffman, 2015). In Eritrea, a poor African country, a large share of the population, nearly eighty percent, is engaged in subsistence agriculture, but the sector only produces a small share of the country's total output (World Factbook, 2018). This causes for a less than desirable economic growth pattern since the country's output of food cannot sustain them without help from other countries, but this is just one example.
By putting patent laws in state, Eritreans can exploit different fields of ideas increasing the incentive to create more big ideas. Supporting entrepreneurship, innovators, and small businesses is just one way a country can experience economic growth.
Works Cited
Cowen, Tyler, and Alexander Tabarrok. Modern Principles of Economics.
Macmillan Education, 2018.
Hoffman, Louis. “Countries in Which the Patent Cooperation Treaty (PCT) Does NOT
Apply.” Hoffman Patent Firm 2015, www.valuablepatents.com/non-pct-countries/.
“The World Factbook: Eritrea.” Central Intelligence Agency, Central Intelligence Agency,
Feb. 2018, www.cia.gov/library/publications/the-world-factbook/geos/er.html.