Innovation and Growth in Belize

For the past two weeks we have been underscoring measures that contribute towards lifting potential growth in the Latin America and Caribbean (LAC) region. For this Business Perspective (BP) article we would like to continue said conversation, but with a focus that is a little closer to home.

Among the common variables used to measure a country’s level of private-sector innovativeness, empirical works often utilize data on research and development (R&D) expenditure, the number of patents, and trademarks as proxy measures for innovation. Ideally, when looking at intellectual properties such as patents and trademarks, it is the number of applications granted that may be most useful; however, where data is scant, we can at least look at the trends in applications.

Firstly, it is useful to remind that the World Intellectual Property Organization (WIPO) defines a patent as “an exclusive right granted for an invention, which is a product or a process that provides, in general, a new way of doing something or offers a new technical solution to a problem.”

In terms of trademarks, the WIPO definition describes it as “a sign capable of distinguishing the goods or services of one enterprise from those of other enterprises”. The idea here is that an entrepreneur, after having taken time to come up with his good or service, would like to control the exclusive right to the registered trademark. This right would also grant the company the ability to command payment for the license given to any other party to utilize the trademark.

Now, as any avid reader of the BP column would recall, fostering innovation is one of the four general policy options available to regional economies that are looking to boost the growth potential of our respective economies. Therefore, a good starting point is to look at the patent and trademark trends for Belize.

According to WIPO statistics on Belize, between 2001 and 2016, inclusive, there had been a total of 1047 trademark applications by residents firms or entrepreneurs. However, about only 40 percent (461) of that number is recorded as having been registered by residents. In terms of “Non-resident” applications, which mostly refer to foreign companies that apply to protect their trademark in as many jurisdictions as possible, even if they do not operate in said jurisdiction, the total numbers of applications are closer to 10,740.

Now, if we believe that one of the drivers of innovation is the macroeconomic condition, then it is noteworthy that in 2016—a recession year—there was a slight decline even in the number of applications. And, in 2009 and 2010, years that closely followed the global recession, according to WIPO data, there were no applications. Nonetheless, one could say that the number of trademarks have been climbing on average.

Conversely, on the patent side of things, we can see where patent applications by resident businesses have been virtually nonexistent, with WIPO data showing only one such application for roughly the last two decades. If we accept the convention of using patent applications and, preferably, registrations as indicators and measures of innovation, then we could safely say that Belize is a far ways off from being deemed a truly innovative economy.

This augurs poorly for both boosting productivity levels and for augmenting potential growth. The to-be-expected next question is this: “How we could reverse this trend?” Among the more common remedies that we shall discuss in the next BP article are measures that looks at improving the availability to financing for innovative ventures, establishing adequate rules for market competition, and, of course, the stabilization of the macroeconomic climate, to name a few.