Question

Identify how protecting sovereign boundaries in regards to intellectual property has a positive effect on the GDP in at least 150 words. Your answer should be in complete sentences.

Answer 1

The establishment of patents and other mechanisms that enforce intellectual property rights are a manner of rewarding effort and innovation. When a company devises an innovative product or a more efficient production technique, holding a patent allows them to exploit it in a exclusive regime, so that no one else can copy or profit from their idea. However, those rights are limited in time, that should be enough for them to recover the investment made to develop the innovation and to earn reasonable profits, and afterwards such innovation can be shared with others to foster efficiency in the economy as a whole.

Such system incentives firms to invest in innovation and to become more efficient (produce more with the same amount of inputs). Therefore the establishment of boundaries to protect intellectual property increases investment and production activities, and these rise the GDP of a country.