Is knocking down geographical boundaries, changing the structure of production and trade within

and among countries. Previously nontraded goods (services) are becoming internationally tradable

through information technology. Previously immobile factors of production (labor) are becoming mobile

as geographic barriers have less meaning. Some manufacturing production is becoming globalized,

with different components produced simultaneously in different countries. Services have been the fastest

growing component of both international trade and foreign investment in recent years. Information

and communications technology can make markets function more efficiently by reducing information

asymmetries between buyers and sellers, eliminating the need for middlemen, and collapsing distance.

Technology can also increase competition and market contestability by lowering barriers to entry, re-

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ducing the minimum efficient scale of production, and providing alternative production techniques.

Industries previously thought to be natural monopolies (utilities) can become competitive.

There are known the following main forms of international trade in the results of intellectual labour:

• trade in licences

• franchising

• engineering

• specialized contracts (leasing, contracts for the supply of complete equipment, adjustment of

equipment, servicing and control of oversize equipment, etc.). See Figure 13.1.

Exchange of

noncommercial

and advertising

character

conferences

symposiums

exhibitions

presentations

International Trade in the Re sults of Intellectual Labour

1 - t “ 7 ’ f

leasing patents of a product engineering research

service industrial models of trademarks industrial training

marketing brand names of complex organization of

research and products retail production

development know-how provision of

design and realization and

survey exploitation

supply of

complete

equipment

Figure 13.1. International trade in the results of intellectual labour

Licence Trade. Trade in licences is a widespread financial practice:

• net (clear) patent licences without know-how

• patent licences with know-how

• patent licences with the prompt transfer of know-how.

The owner of a licence (grantor of a licence) when selling an invention is able to reserve by law

the right to use a licence object and sell similar licences to other individuals or legal entities (businesses

— holders of licences). It is an accepted practice to give exclusive rights to a holder of a licence

while a grantor of a licence cannot use the object of a licence.

Trade in licences is realized on the basis of a contract (licence agreement). One should bear in

mind that time is the limiting factor for a patent. In the US it is 17 years, in Britain it is 16 years.

The licence price is determined by many factors: the size of the profit, the costs involved in making

new technologies, the expenses on mastering the production of technical novelties, potential expenses

on the independent development of a project, etc.

There are two kinds of calculation for purchased licences for inventions or know-how:

a) [licence] royalties which are periodic payments from the profit gained by a purchaser during

the time of validity of a contract. This is the most recurrent way of rewarding a grantor of a licence;

b) lump sum payments (single payments) which are determined according to the experts’ estimation.

Franchising is a contractual arrangement under which an independent franchisee produces or

sells a product or service under the brand name of the franchiser and to his specifications and with

marketing and other support. The franchisee pays a royalty to the franchiser and may purchase

supplies from him. The franchisee provides his own capital and is legally an independent enterprise

which is none the less highly dependent upon the franchiser, though many small businesses, say,

with a high proportion of sales to a single customer, may enjoy no greater degree of independence

than many franchised enterprises. Franchising is growing rapidly in the UK but is less important

than in the USA, where it accounts for over one-third of retail turnover. Examples of franchised

operations are filling-stations and various fast-food outlets.

Engineering is a complex of services in the design, construction and control of production enterprises,

electric power plants, objects of infrastructure (roads, bridges, etc.). Engineering is a

180

practical application of scientific knowledge. This kind of services has scaled up greatly over the

last decades and acquired new forms.

The World Bank having gathered information about international trade and technology assembles

data about payments for foreign royalty and license fees (reported by the IMF in the Balance

of Payments Statistics Yearbook). Developing countries and CEITs made payments and received