The impact of intellectual property rights (IPRS) on the processes of economic development and growth is uncertain and dependent on multiple factors. In this regard, the effectiveness of IPRS is highly depended on specific circumstances of each nation. Although economists are devoting considerable attention to this issue, evidence so far is mixed and conflicting, in part because many of the concepts involved are not readily measured.

The globalization or internationalization of trade and economy, and the multilateral rules that bound nations to accept or adopt an approach through close interaction between government, industry and the creative segment of the society. Strong IP protection with adequate and modernized legislation plus its effective enforcement undoubtedly helps in transfer of technology and consequently, technological development. It also helps in attracting Foreign Direct Investment.

The intellectual property system is one of the major corner stones of modern economic policy at the domestic level. It is increasing becoming a tool for sustainable development. Understanding and appreciating the foundation of intellectual property and the copyright system, is a condition for analyzing its growing importance and position in national strategies for enhancing competition.

Copyright is not an in itself, it is a means to an end, a catalyst for accelerating social, cultural and tech-economic growth in developing countries. Its effective protection and use effects economic growth by providing the necessary incentives for increasing competitive capability. The recognition of the creator, the protection of his rights and the rights of those who invest in the making of his creation, contribute positively to the economic development of the country.

The indispensability of examining intellectual property rights through the economic perspective is an outcome of the concept of intellectual property as a social phenomenon. Both economics and intellectual property, in particular, are explicitly linked to innovation, technology, and growth. The existences of a copyright is also a legal base for contractual arrangement between the creator and the one developing the idea and tone the one hand institutions wishing to use those ideas in their manufacturing process leading to development.

The economic development of the country determines the growth of intellectual property and vice versa. The economic value of intellectual property, the socio-economic benefits of the works of the mind is not yet a fully tapped potential in India. There needs to be broadcasting of the awareness of the considerable relevance of effective protection of intellectual property in safeguarding the results of technological development, as well as in promoting national creative endeavor.

A much greater and more widespread knowledge and understanding has to be constructed of its economic benefit for the private industry also for natural growth and development in the current generation, also as to how the intellectual property system can be utilized to promote national creativity. Many authors of mental works and innovators are unfamiliar of the basic limitations of intellectual property legislation, and now must sell the products of their ingenuity. The challenges, particularly for SMEs, are to improve domestic efficiency of creative management of their core industry in an increasingly competitive global economy with potential for investments and exports.

In India, small enterprises account for as much as 35% of the total value of industrial production in diverse fields. They contribute more than 30% of the country’s total export trade and provide employment to over 50 million people. However special focus is necessary to be laid to technology inputs, quality promotion and other practices to make them emerge as a vibrant constituent of the national economy. The problems faced by small enterprises particularly in accessing technology and developing export competitiveness have been formidable. Lack of familiarity with new technology options, inability in accessing them and organizing necessary finance for technology up gradation are a few which need to be addressed through institutional support.

The general public must also be made aware of the significant economic importance of successful intellectual property rights, as well as the resulting socio-economic gains from increased qualitative competitiveness in trade and copyright, as well as greater technological innovation possibilities as the world transitions from the industrial to the information age. Both policy makers and researchers require a better understanding of the substantial effect that a country’s system of IPR protection has also on transfer of technology especially in high tech industries.

The business environment both domestic and international is becoming more competitive. The increasing market orientation of economic policies in most of our countries coupled with the gradual lowering of tariff barriers is reducing the gap between domestic and international markets, and domestic players have to be internationally competitive.

The process of development is a multifaceted. It seeks to create a broad-based sustainable improvement in the quality of life and the standard of living. The Economic growth is a crucial, though not the only, pre-requisites for development. Removal of barriers and opening up of economics in developing countries had already resulted in an unprecedented flow of funds and investment. Again, in those developing countries which have also used their productive sector to diversify and broad base their manufacturing activities with the use of the IP system for qualitative production for exports, their living standards have shown a steady and distinctive improvement. The challenges lie in invigorating the domestic efficiency innovation management.

There is an increasing recognition in the world over that the IP system provides a balance of interests between the creators of new technology, who spend large outlays and resources creation and development of technology, and consumers of technology who employ it as a valuable tool for enhancing their technological capacity and market competitiveness.

Protection of intellectual property rights is also a necessity for development of the global information infrastructure. In particular the improvement of enforcement procedures is urgent need for helping and fostering creativity and creating activity in a networked era. Well- enforced copyright legislation is essential for providing the necessary market-based incentives and rewards needed to promote creativity in literary and artistic works.

It is an important contribution factor in socio-economic and cultural development of a country, as it encourages, attracts and sustains investment in what has come to be known as the cultural industry. A modern and well enforced copyright system could be a driving force and one of the strong imperatives in the process of economic reform, in further liberalizing and restructuring of the economic and trade policies and in the promotion of national economic growth & development.

In some countries, the so-called copyright industry is the fastest growing sector of the economy, generating significant jobs and raising export performance and potential. The contribution of this industry to the gross national product (GNP) is also bound to increase in the years to come, in a number of rapidly growing developing countries, while addressing both the new challenges and opportunities posed by the increasing borderless nature of trade and economy. Studies have indicated the contribution of copyright or cultural industries to Gross National Product in world’s national democracy (India) is 5.06% including their dependent industry.

The economic importance of intellectual property in respect, for instance, of the copyright industry in countries, which are major creators of copyright materials, has been well established. All studies carried out so far indicate that it contributes considerably to national economic wealth.

For developing countries, an important economic indicator of the contribution of the copyright of cultural industry is that it is also a substantial employment provider. The income from exports of intellectual property products has also increased sizably in a number of countries. The significant employment potential of the copyright or cultural industry is an important factor to be considered in developing countries, since quite a number of our countries in different regions of the world have a very sizeable cultural industry, in terms of its contributions to the GNP. The economic value of the intellectual property rights lies also in increasing competitive capability, which is important in an electronic age, particularly also as copyright protection extends to mass media communication, printed magazines, sound and television broadcasting, films and, in some countries, also computer programs and computer systems for data storage.

A general realization that is lacking is that copyright industries in a number of developing countries such as India are also a sizeable proportion of their respective GNPs and are by no means a negligible proportion of the economy. They are also substantial job providers, hence the necessity to protect them through strict enforcement, the natural copyright laws, which latter should provide for stringent penal provisions.

Employment is a particularly significant consideration in India. One survey revealed that the public perception about employment generation is worse than what it was during the second term of the United Progressive Alliance (UPA). Although another survey showed that job growth had ostensibly been robust during the first two years of the current government, reports suggest that it was mostly in the informal sector. Compounding the issue of jobs is the looming threat of automation, which is poised to do away with many of the employment opportunities available today.

Adoption and use of efficient IP system that encourages creative activity is a sine-qua non in our own larger national interests. Removal of barriers and opening up of economies in a number of developing countries has already resulted in an unprecedented flow of funds and investments. For benefiting from the economic value of the protection of intellectual property rights, it is necessary that business and industry, as well as scientific institutions should be encouraged to consciously promote among their employees, technocrats and scientists the innovative and creative spirit, and to use the IP system as a tool for development.

The impact of intellectual property on growth is determined by nation’s level of development. Other factors, which encourage economic growth, are stimulation of creativity and innovation, market deepening, reliable quality, domestic and international knowledge diffusion, composition of global research and development (R & D) Maskus, et al. (2005). The proposed model explains the process of economic growth. It emphasizes the importance of IPRs in theory of endogenous development.

It highlights the growth process centered on IPRs through international trade, foreign direct investment (FDI), licensing, R&D channels (innovation). The combined effects of IPRs through these channels will boost economic growth. The effect of Intellectual Property Rights (IPRs) on international trade flows when knowledge intensive goods move across national borders.[6] Patent system promotes technological and business competition, because patent holders and their competitors compete each other to improve inventions and to create new ideas.[7]

The impact of stronger patent rights on trade is indeterminate, according to Raffiquzzaman (2002), since trade volumes rise and fall simultaneously due to market growth and market strength. The net trade result is determined by which effect takes precedence; if the market power effect outweighs the market expansion effect, trade flows will decrease. If the opposite occurs, strengthened IPR protection will lead to trade expansion.