Patents Protection Crucial To Foreign Investment Flow: Sachs

Jeffrey D Sachs, director of Harvard Institute of International Development, said yesterday foreign direct investment (FDI) into India may be affected if the country does not take measures to protect intellectual property rights (IPR).

It is a proven fact that countries that do not protect IPR dont get that much FDI. IPR protection is absolutely critical, Sachs told a gathering at the Indian Institute of Technology (IIT) here.

Sachs said FDI inflow was critical not only because it brings in capital, but it forges business links and technology between India and rest of the world.

Nobody wants to give innovations free as it involves a great deal of effort, he said, adding that closing international technology and trying to be on ones own would mean cheating oneself of the incredible scientific and technological progress being made around the globe.

 

Sachs, who is also the advisor to several governments in Europe and Latin America, predicted a growth rate of 9 to 10 per cent in India in coming years, if the infrastructure was improved and the social sector taken care of.

It is no longer heroic by any stretch of imagination to say that a 9 to 10 per cent growth is realistic.

Sachs said the Centre has to initiate policies towards greater openness in economic reforms, reorient fiscal policies and ensure rule of law for taking advantage of the truly global system that has emerged for the first time in the world.

He said it is critical to control government expenditure, keep tax rates low and fiscal deficit within manageable limits.

Referring to the rule of law, Sachs said India is in a paradoxical situation on this account. Corruption hurts economic growth and reforms.

The economic growth was hampered by at least half-a per cent as a result of corruption. The rule of law would also mean predictability of bureaucracy, efficiency of the judiciary and respecting private property rights.

India has a well-established system and there is every possibility to jump way ahead of China. China will have `civilisational problems when it tries to change and India can be a beacon, if the system is simply made to work.

India has a destiny of world leadership. Your role is too important and can do wonders for the entire world, Sachs said while stressing the need for improving primary education and health care.

He said countries around the world had opened up dramatically in the last decade, and today, about 5 billion people are integrated by a system of international commerce and ideas of market-led growth.

Referring to openness of economic policies and its relation to the system of government followed, Sachs said democracy is not a guarantee to economic reforms but certainly not a barrier.

On the social welfare system followed in Europe, he said it is a warning for what not to do, adding that this holds backs economic performance.

Taxing nearly half of the gross national product (GNP) is no way to grow. It may lead to fiscal collapse. He observed that India has to steer its reforms process faster to show Europe the way.