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Aid, Trade and
Development
Second Edition

The Future of
Globalization
Constantine Michalopoulos
 Aid, Trade and Development

“This is a very well written book, technically sound, and a great source of
material for anyone who wants to understand the factors that have shaped
much of international economics for the past half century. This new edition
adds useful perspective on the implications of the new challenges facing
developing countries as a result of the pandemic and increased unilateralism
and protectionism in the North. More tellingly, Michalopoulos writes with
passion on developments that he knows very well and cares deeply about.”
—K.Y. Amoako, President of the African Center for Economic
Transformation, Ghana

“In this new edition, Michalopoulos adds valuable new insights on critical
current issues, making his panoramic overview of the global economy even
more incisive.”
—Danny Leipziger, Professor of International Business and International
Affairs, George Washington University, United States

“As its predecessor, this book is coolly realistic and solidly grounded on empir-
ical evidence. But it also offers a vision of the policies required to reverse the
troublesome changes of the last few years, while at the same time recognizing
the imperative of greater inclusiveness of groups and countries left behind by
the earlier globalization waves. Both the analysis and the vision outlined by
Michalopoulos will contribute substantially to the international debate and
actual initiatives on international trade and on development prospects of poor
countries.”
—Salvatore Schiavo-Campo, former Senior Adviser at the Asian Development
Bank, Philippines, author of Running the Government

“Getting aid and trade policy to support sustainable development is not easy.
Michalopoulos’ new book tells the story of past progress and failures over
the last half century. In recent years we have gone backwards. The author
argues that the global community should live up to its commitments to help
end global poverty and that we cannot prevent disastrous climate change and
ecological collapse without a renewed commitment to multilateral coopera-
tion. Developing countries must receive the support promised in Glasgow at
COP26. The book is readable and authoritative. If we are to do better, we
must build on the lessons of the past and this volume will help enormously.”
—Clare Short, former Secretary of State for International Development,
United Kingdom
 Constantine Michalopoulos

Aid, Trade
and Development
The Future of Globalization

Second Edition
Constantine Michalopoulos
Lusby, MD, USA

ISBN 978-3-030-96035-3 ISBN 978-3-030-96036-0 (eBook)

https://doi.org/10.1007/978-3-030-96036-0

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To Eveline whose unwavering commitment to a just economic order and
democratic institutions is a continuing inspiration
 Preface

The idea of writing this book first came to me about a decade ago. At
that time, I had written Migration Chronicles, a semi-autobiographical
volume, and several friends had said: “Nice book, but what did you actu-
ally do in those jobs you had?” So, I thought that at some point I would
write something which focused on the various development policy issues
involving aid, trade, and development with which I grappled in various
positions with the World Bank, USAID, and WTO.
I was lucky that I was involved in a small way in policymaking on the
major issues of the period from the late 1960s to the early twenty-first
century: addressing the impact of the OPEC oil price rise in the early
1970s, the development of a basic human needs aid strategy in the late
1970s, the debt crisis, the “Washington Consensus” and “Adjustment
with a Human Face” of the 1980s, the collapse of the Soviet Union and
the birth of the WTO in the 1990s; and later in the decade 2000–2010
with continued involvement on these issues as a consultant to European
aid agencies like the UK’s DFID, Sweden’s SIDA, and Germany’s GTZ.
In the fall of 2015 when, after 50 years, I finished my professional
career teaching a course on International Trade and Development at

vii
viii Preface

the School of Advanced International Studies (SAIS) of Johns Hopkins

University, I thought I may take up the idea of writing a book detailing
my professional experience.
Very soon it became clear that the material I had collected plus my
own publications would not do justice to the complex issues that I had to
address. Much more research was needed. Laura Pacey, Commissioning
Editor at Palgrave/ MacMillan at the time, was extremely supportive and
I was offered a contract for the first edition of this volume in the summer
of 2016.
As I was writing the world around me continued to change: Brexit
was being negotiated but had not yet happened, populism was on the
rise in Europe and the US, and strident protectionist, anti-globalization
voices were everywhere. I felt that I should address more explicitly
the issue of globalization which the institutions in which I had been
working had actually promoted—not explicitly but implicitly, through
the encouragement of open trade and capital flows.
The resulting volume Aid, Trade and Development: Fifty Years of Glob-
alization was published in late 2017. The volume was well received. But
over the next several years a lot of the fears—which I had entertained but
was unwilling to openly admit—came to pass. Populism became stronger
on both sides of the Atlantic: Brexit occurred, the Trump Administra-
tion led the US down a nationalist, anti-democratic path, and nativist
and autocratic tendencies emerged in many parts of Europe. At the same
time, China started to turn inward and take more anti-democratic steps
both domestically and in Hong Kong.
And then in 2020 COVID-19 happened, and the world is no longer
the same. While a great deal of the historical analysis on the role played
by aid and trade in globalization and development was still valid, the last
part of the volume which talked about the future was obsolete. Palgrave
agreed that a new volume was needed which considered the momentous
changes of the last few years including those brought by the pandemic
and looked ahead to addressing climate change and the new challenges
facing humanity.
The result is this new second edition. The first half of the volume,
which discusses developments until 2008, is essentially the same as
in the first edition, with several of the tables and other information
 Preface ix

updated. The middle three chapters dealing with the past decade have
been substantially rewritten to reflect more recent perspectives. The last
part of the volume is completely new: it reviews the pandemic experience
and its impact on sustainable development and makes recommendations
on how to address the challenges of the future, a future which looks
more uncertain than a few years ago: These include actions to deal with
future pandemics, addressing climate change, working to make global-
ization more just and equitable, and promoting longer term sustainable
global development. As the volume was going to print Russia invaded
Ukraine adding another great uncertainty to the future world order. The
last chapter ends with a call for a revival of multilateralism, as both
the pandemic and climate change have reminded everybody that global
problems can only be addressed through global multilateral action.

Lusby, USA Constantine Michalopoulos

 Acknowledgments

This volume could not have been completed without a great deal of help
and advice from friends and former colleagues. I am grateful to very
many of them who over the years influenced my thinking about aspects
of aid, trade, and development, but were not involved in the writing of
this volume or its previous edition.
Special thanks are reserved for a group who devoted a lot of effort,
some to provide material, others to correct my mistakes, add perspec-
tives, and actually change my views by reading and commenting on one
or several chapters or the whole of the first edition of this volume whose
contribution continues as this edition contains a good deal of material
from the old one. These include Masood Ahmed, K. Y. Amoako, Michael
Crosswell, John Eriksson, Ruth Jacoby, Hilde Johnson, Danny Leipziger,
Ira Lieberman, James Michel, John Nellis, Donal Donovan, George
Papaconstantinou, Salvatore Schiavo-campo, Alexander Shakow, Clare
Short, David Tarr, George Tavlas, and Heidemarie Wieczorek-Zeul.
And then there was a somewhat smaller very special group who perse-
vered and continued to help with this second edition. Clare Short
read and commented on the whole volume, while K. Y. Amoako,

xi
xii Acknowledgments

Danny Leipziger, Salvatore Schiavo-Campo, and Maureen Lewis read

and commented on the new and rewritten chapters. Ron Keller and
Marina Ponti provided comments and speeches
This book could not have been done without the contributions of
Zhangrui Wang, who did an excellent job in developing all the statis-
tical work and tables for the first edition but whose work is still included
in this version; as well as Nicholas Papoulias who did an equally great
job in updating the old tables and preparing several new ones for this
edition. Loukas Tsoukalis and Dimitris Katsikas of the Hellenic Foun-
dation for European and Foreign Policy have also provided help in this
project including organizing a seminar on the first edition of this volume.
I reserve my greatest thanks for Eveline Herfkens, my long-time
partner in life and work who has read and commented on all my recent
books and has been an important influence on my thinking about the
role of aid and trade on sustainable development. She has contributed her
own valuable experience, speeches, publications, and research materials
that were critical to developing the story about aid and development in
the two decades 1990–2010, which she and her soul mates in the Utstein
group had a hand in making. And she influenced greatly the sections on
climate and the environment, an important addition to this new edition.
Thanks are also due to the IMF for permitting me to reproduce
certain passages of my article “World Bank Programs for Adjustment
and Growth” in Vittorio Corbo, Morris Goldstein and Mohsin Khan
Growth Oriented Adjustment Programs; to the World Bank for letting me
reproduce Table 1.8 from Global Economic Prospects 2002; to FAO, UN
and the World Bank for letting me reproduce a table that they prepared
which was published as Table 2.7 in the World Bank’s 1988 Report on
Adjustment Lending Ten Years of Experience; to Oxford University Press
for permitting me to reproduce certain passages from my book Ending
Global Poverty: Four Women’s Noble Conspiracy. All remaining errors are
my responsibility.

Constantine Michalopoulos
 Contents

1 Introduction 1
2 Growth Constraints, Aid Targets, and Basic Needs 9
3 Export Pessimism and the Neoclassical Revival 35
4 Debt and Adjustment: Muddling Through 55
5 The Collapse of Planning and the Troubled
Transition 97
6 The Birth of the WTO 133
7 The Many Faces of Globalization 173
8 Millennium Aid, Trade, and Development 217
9 Liberalism in Retreat 251
10 Sustainable Development Goals 295
11 The Rise of Populism and Anti-Globalization 313
12 The Plague Years 341

xiii
xiv Contents

13 Toward an Equitable Re-Globalization 359

14 Reviving Multilateralism 393

Index 419
 About the Author

Constantine Michalopoulos has worked on and written about

economic development for more than half a century. Between 1982–
2001 he was a senior official at the World Bank. Before that he was Chief
Economist of the US Agency for International Development. Between
1997–1999, he served as Special Advisor at the WTO. Following his
retirement from the World Bank he served as a development advisor
to governments and international organizations including the IMF,
UNCTAD, the EU Commission, GTZ and the UK DFID on interna-
tional trade, finance, and development. Most recently he was appointed
Senior Advisor at the Hellenic Foundation for European and Foreign
Policy, in Athens, Greece. He has also taught economics at several US
universities, and is the author of several books and over 100 articles and
monographs. Dr. Michalopoulos is a graduate of Athens College and
holds a PhD in economics from Columbia University in New York City,
USA.

xv
 Also by Constantine Michalopoulos

Aid, Trade and Development: 50 Years of Globalization (1st Edition, 2017)

Emerging Powers in the WTO (2014)
Developing Countries in the WTO (2001)

xvii
 Acronyms

AB Appellate Body
ACET African Center for Economic Transformation
ACFTA African Continental Free Trade Area
ACP African Caribbean and Pacific
ACWL Advisory Centre on WTO Law
ADB Asian Development Bank
AFT Aid for Trade
AGOA African Growth and Opportunity Act
AHDI Adjusted Human Development Index
AHF Adjustment with a Human Face
AID Agency for International Development
AIIB Asian Infrastructure Investment Bank
AITIC Agency for International Trade Information and Cooperation
AMS Aggregate Measures of Support
ASCM Agreement on Subsidies and Countervailing Measures
BHN Basic Human Needs
BRICS Brazil, Russia, India, China, South Africa
BWI Bretton Woods Institutions
CCRT Catastrophe Containment and Relief Trust
CEE Central and Eastern Europe

xix
xx Acronyms

CFC Common Fund for Commodities

CGD Center for Global Development
CIEC Conference for International Economic Cooperation
CIS Commonwealth of Independent States
CMEA Council for Mutual Economic Assistance
COMESA Common Market for East and Southern Africa
COVAX Vaccines Global Access
CSO Civil Society Organization
DAC Development Assistance Committee
DFQF Duty Free, Quota Free
DSB Dispute Settlement Body
DSM Dispute Settlement Mechanism
DSSI Debt Service Suspension Initiative
EAC East African Community
EAEU Eurasian Economic Union
EBA Everything But Arms
EBRD European Bank for Reconstruction and Development
ECB European Central Bank
EDME Emerging and Developing Market Economies
EFF Extended Fund Facility
EIF Enhanced Integrated Framework
EMENA Europe, Middle East and North Africa
ESM European Stability Mechanism
EU European Union
FAO Food and Agriculture Organization
FCDO Foreign, Commonwealth and Development Office
FCO Foreign and Commonwealth Office
FDI Foreign Direct Investment
FSU Former Soviet Union
FTA Free Trade Agreements
GATS General Agreement of Trade in Services
GATT General Agreement on Tariffs and Trade
GAVI Global Alliance for Vaccines and Immunization
GPEDC Global Partnership for Effective Development Co-operation
GSP Generalized System of Preferences
HDR Human Development Report
HLPF High-Level Policy Forum
ICT Information and Communications Technology
IDA International Development Association
 Acronyms xxi

IDB Inter-American Development Bank

IDS International Development Strategy
IDT International Development Targets
IFAD International Fund for Agricultural Development
IFC International Financial Corporation
IFI International Financial Institution
IFPRI International Food Policy Research Institute
ILO International Labor Organization
IMF International Monetary Fund
IPO Initial Public Offering
ITA Information Technology Agreement
ITC International Trade Center
LDC Least Developed Country
MDBs Multilateral Development Banks
MDG Millennium Development Goals
MDTF Multi-Donor Trust Fund
MEBO Management–Employee Buyouts
MFA Multi-Fiber Arrangement
MFN Most Favored Nation
MNC Multinational Corporation
MPIA Multiparty Interim Appeal Arbitration Arrangement
MSA Most Seriously Affected
NAFTA North-American Free Trade Agreement
NAMA Non-Agriculture Market Access
ND New Democracy
NGOs Non-Governmental Organizations
NTBs Non-Tariff Barriers
NTMs Non-Tariff Measures
ODA Official Development Assistance
OECD Organization for Economic Cooperation and Development
OOF Other Official Flows
OPEC Organization of Petroleum Exporting Countries
OPIC Overseas Private Investment Corporation
PEPFAR President’s Emergency Plan for AIDS Relief
PFP Policy Framework Paper
PPE Personal Protection Equipment
PRSPs Poverty Reduction Strategy Papers
PSI Private Sector Involvement
PTAs Preferential Trade Agreements
xxii Acronyms

RCEP Regional Comprehensive Economic Partnership

RTA Retroactive Terms Adjustment
SADC Southern Africa Development Community
SAL Structural Adjustment Loan
SDG Sustainable Development Goal
SDR Special Drawing Right
SDT Special and Differential Treatment
SECALs Sectoral Adjustment Loans
SOE State Owned Enterprise
SPS Sanitary and Phytosanitary Measures
SSA Sub-Saharan Africa
STRI Services Trade Restrictive Index
TBT Technical Barriers to Trade
TFA Trade Facilitation Agreement
TPP Transpacific Partnership
TPRM Trade Policy Review Mechanism
TRIMS Trade Related Investment Measures
TRIPS Trade Related Intellectual Property Rights
TTIP Transatlantic Trade and Investment Partnership
UN United Nations
UNCTAD United Nations Conference on Trade and Development
UNDP United Nations Development Program
UNECA United Nations Economic Commission for Africa
UN ECOSOC United Nations Economic and Social Council
UNESCO United Nations Education Scientific and Cultural
Organization
UNICEF United Nations Children Fund
USAID United States Agency for International Development
USMCA United States Mexico Canada Agreement
USSR Union of Soviet Socialist Republics
VNR Voluntary National Review
WHO World Health Organization
WTO World Trade Organization
 List of Tables

Table 2.1 ODA Performance of DAC Countries 1970–2020

(in $ million and %GNI) 17
Table 3.1 World merchandise exports by country group
and region, 1970–2020 43
Table 4.1 GDP per capita annual growth (in percent per annum) 62
Table 4.2 Social indicators in the 30 adjustment lending
countries 78
Table 5.1 World Bank projects in Russian Federation
1992–1998 111
Table 5.2 Scope of privatization 1999, 2014 and method used 115
Table 6.1 Bound and applied tariffs in developing countries 145
Table 6.2 Sectoral Service Trade Restrictiveness Indices (STRI)
in developing countries 151
Table 7.1 Poverty in developing countries 1990–1999 178
Table 7.2 GDP annual growth 1970–2020 (in percent
per annum) 182
Table 7.3 Total net flows from DAC countries by type of flow
1970–2019 (in $million and percent of total) 199
Table 9.1 Total net flows from DAC countries by type of flow
2003–2019 255

xxiii
xxiv List of Tables

Table 9.2 Poverty in the twenty-first century in millions of poor

and percent 287
Table 12.1 Global GDP growth 2019–2022 348
 1
Introduction

Developing countries have made tremendous progress in reducing

poverty in the last fifty years. More open societies and more open
economies have contributed to this progress as has international coopera-
tion in support of economic development. In the aftermath of the 2008
financial crisis, however, nationalist and populist movements in devel-
oped countries have introduced policies that reduce the effectiveness of
aid programs, increased trade protectionism and hindered international
migration, thereby undermining the prospects for sustainable global
development. These developments, combined with an increasing US-
China rivalry and the Russian invasion of Ukraine have weakened multi-
lateralism and the institutions set up in the post-World War II period
to promote peace and address global problems, such as the Covid-19
pandemic, climate change, and persistent poverty and inequality.
This volume analyzes foreign aid and international trade policies and
their impact on economic development and poverty eradication in the
last half-century. This is followed by a review of the emergence of anti-
globalization forces, their causes, and implications. The last part discusses
the impact of the COVID-19 pandemic on the global economy, the
future of globalization, and the challenges faced by the international
© The Author(s), under exclusive license to Springer Nature 1
Switzerland AG 2022
C. Michalopoulos, Aid, Trade and Development, Second Edition,
https://doi.org/10.1007/978-3-030-96036-0_1
2 Constantine Michalopoulos

community in assisting developing countries achieve the Sustainable

Development Goals (SDGs) and in particular poverty eradication and
sustainable development.
The policy review is by necessity selective in coverage, and broad-
brush in approach. The enormity of the task prevents many details
and nuances. The focus throughout is on poverty eradication (SDG1),
although, education targets are frequently addressed and the later chap-
ters also discuss problems of the environment and climate change. Some
important issues such as gender and the recent advances in artificial intel-
ligence are largely left out. Long-term demographic changes also have a
bearing on patterns of development and migration but are discussed only
briefly. In this broad canvas, there will be a few light sprinkles of paint
reflecting my own writings and work as I was fortunate to have been
involved in a small way in many of the important events that shaped
sustainable development until the Millennium.
The narrative is roughly chronological but with many recurrent
themes. In the mid-to-late 1960s, the world was in the middle phase
of globalization of the modern era, with the sum of exports and imports
around 20% of world Gross Domestic Product (Baldwin 2016). Devel-
oping country attitudes toward international trade and foreign invest-
ment, were mostly negative. Demand prospects for primary commodities
that constituted the bulk of developing country exports were dim.
The predominant view was that development required import substi-
tution and industrialization behind strong protective walls of tariff and
non-tariff barriers. Many developing countries viewed foreign direct
investment with suspicion. Other private capital flows were virtually
non-existent. The US and the Soviet Union were using foreign aid in
competing for the hearts and minds of the public in the so-called Third
World, while Europeans were channeling most of their aid to former
colonies. The World Bank was only financing infrastructure projects and
UN assistance was in its infancy.
Chapter 2, which follows this introduction, discusses the early
thinking about the role aid can play in development, including the idea
that aid increases investment and contributes to growth by providing
access to foreign exchange, which was thought to be in scarce supply
at early stages of development. The popularity of the latter notion is
 1 Introduction 3

explained in part by the pessimism about the prospects for developing

country exports, the topic of Chapter 3.
Over time there was a reaction to both early notions. On the aid
side, there was increasing concern that the focus on aid volume ignored
questions of aid effectiveness and, in particular, questions about who
benefited from the assistance programs. In turn, this led to a discussion of
how to use aid to address more explicitly the needs of the poor. On the
trade side, Chapter 3 discusses evidence that developing country trade
policies played a significant role in bringing in foreign exchange and
that countries whose trade policies did not discourage exports tended
to have a stronger growth performance. These considerations led many
developing countries to reevaluate their trade policies and adopt more
outward-looking strategies resulting in greater integration into the global
economy in later periods. Chapter 3 also raises for the first time the issue
of incoherence between developed country aid and trade policies as they
affect development.
The oil price increases in the 1970s led to increasing debt burdens for
many oil-importing countries combined with demands for the establish-
ment of a “New International Economic Order” based on the increased
economic power of commodity and energy exporters joined through
international agreements. Little came of the latter efforts. But the oil
price increases left a large debt burden for many developing countries,
which, combined with a lack of international action to provide relief,
doomed their economic prospects in the 1980s. Chapter 4 addresses the
impact of the successive oil price increases of the early and late 1970s
on developing country prospects and their implications in raising their
international debt burden, another less attractive aspect of globalization.
The chapter then discusses the so-called “Washington Consensus” and
analyzes the long and tortuous efforts of the international community to
come to grips with the problems of two sets of countries: highly indebted
middle-income countries whose international indebtedness was primarily
to commercial banks in the developed world and the highly indebted
low-income countries (HIPC) whose debt was primarily to official bilat-
eral and multilateral donors. This muddling through approach, in the
end, produced the “Brady bond” and HIPC debt forgiveness schemes
which, however, did not prevent extended stagnation for many countries.
4 Constantine Michalopoulos

The following three chapters address three key developments of the

1990s: Chapter 5 analyzes the breakup of the Soviet Union and the
troubled transition from plan to market which resulted in more open
societies and economies both in the fifteen new states and in Central
and Eastern Europe (CEE), but also created great short-term costs. The
fifteen new states that emerged from the former Soviet Union had to
become members of World Bank and the IMF as did some of the CEE
countries (while others had to reactivate their membership) in order to
receive much needed assistance. A new international economic order did
come about in the 1990s but of a very different kind than that sought
by the developing countries in the 1970s.
Chapter 6 discusses the birth of the WTO, a new multilateral trade
organization whose establishment has had significant implications for the
conduct of international trade in both goods and services as well as intel-
lectual property rights and other “behind the border” regulations that
impact all countries’ trade. Over time, stronger growth performances of
export-oriented developing countries, especially in Asia, led to a more
active developing country participation in the new organization and a
generally more positive view of the impact of trade on development,
though concerns continued to linger about its impact on poverty.
Chapter 7 addresses issues of poverty and globalization. The end of the
Cold War permitted a greater focus of economic assistance on develop-
ment, as well as on ways of making assistance more effective in addressing
poverty. The chapter also assesses the performance of different developing
country groups in reducing poverty and the attitudes of their public
toward the onset of globalization. At the time, discourse about global-
ization was mostly fearful: with the exception of East Asia, there was a
general unease that globalization will benefit only a few countries, or a
few elites while moving forward at a faster pace than most of humanity
can cope with. In the developed world increases in inequality fueled
the discontent with globalization. At the same time, there was aware-
ness that exogenous forces involving technological change are pushing
globalization inexorably forward, and hence there was fear of being left
behind—of becoming further marginalized.
 1 Introduction 5

Rapid technological change combined with expansion of trade and

private capital flows in the 1990s and the early years of the twenty-
first century resulted in the massive spread of globalization throughout
the developing world with trade reaching and exceeding 50% of global
GDP. Chapter 8 looks at aid and trade at the turn of the century, a
period of rapid growth of trade and GDP, large reductions in poverty,
the emergence of China as a global power, and many new international
agreements aimed at improving the effectiveness of economic assistance
and liberalizing trade. Most notable of these agreements was the Millen-
nium Declaration and the subsequent global commitment to achieve the
Millennium Development Goals (MDGs).
The overall theme that emerges from this retrospective is that both
trade and aid can benefit development and poverty eradication, but
whether they do depends very much on the presence of other coherent
supportive policies in both developed and developing countries. In
particular, there is a need for coherence between developed country aid
and trade policies; there is a need for overall coherent domestic strate-
gies for development in developing countries for trade and aid to have a
beneficial impact on reducing poverty and promoting sustainable devel-
opment, and there is a need for effective international collaboration to
achieve these objectives.
Following the 2008 financial crisis, attitudes toward globalization
shifted. In the 1990s, the developing world was much more fearful.
In the aftermath of 2008, reactions have been mostly negative in the
developed world. Anti-globalization sentiment has given rise to populist
movements with agendas to raise trade protection, reduce foreign aid,
and limit migration. These movements have emphasized bilateral rela-
tionships and undermined the principles of multilateralism that are
fundamental to the operation of global institutions. Chapter 9 points to
a worrisome trend of increasing protection, only modest achievements in
further trade liberalization, backtracking on commitments to increase aid
and its effectiveness; and, most disturbing, the rise of anti-globalization
populism in the US and Europe which threatens the core principles on
which international cooperation on trade and economic assistance had
been based for the past half century.
6 Constantine Michalopoulos

The post-2008 slowdown in trade, finance, and growth of the world

economy decelerated but did not stop developing country progress.
Building largely on the momentum gained in the early 2000s, devel-
oping countries achieved considerable progress in reducing poverty and
achieving the other MDGs. In the fall of 2015, there was sufficient
momentum left in multilateral cooperation to permit the UN to adopt
a new set of goals for the world community to achieve by the year 2030.
Chapter 10 discusses the Sustainable Development Goals, their design,
and progress and challenges in their attainment until 2019, just before
the pandemic.
By 2016, the clouds of inward-looking populism and nativism had
already darkened the prospects for global cooperation. Chapter 11
assesses the merits of the anti-globalization arguments as they relate to
international trade, immigration, and capital flows, including aid. The
last part reviews the experience of two populist take-overs, in the UK
and Greece, and their broader lessons and implications for sustainable
development.
Chapter 12 discusses the impact of the Covid-19 pandemic on the
global economy and the prospects for achieving the SDGs. The analysis
discusses the sharp short term economic contraction which re-enforced
anti-globalization attitudes, the strong but very uneven rebound that has
increased inequalities both within and among countries, as well as the
attendant uncertainties about the near-term future. It also presents some
preliminary considerations on the pandemic’s longer term effects both on
the lives of individuals and the broader sustainable development goals.
Chapter 13 looks ahead at the future of globalization and presents
recommendations on the global actions needed to establish a more just
re-globalization. These involve actions in several fields to (a) strengthen
the social safety nets in both developed and developing countries; (b) deal
with the effects of rapidly changing technology; (c) reduce the monopoly
power and establish a system of more equitable and uniform taxation
of MNCs; (d) cope with the refugee crisis; and (e) restore the effec-
tive functioning of the WTO. Russia’s invasion of Ukraine has created
new uncertainties about future developments in trade and finance, the
prospects for globalization and an emerging new economic world order.
 1 Introduction 7

The last chapter focuses on the steps the global community has to
take to provide economic assistance to developing countries to meet
the challenges of achieving longer term sustainable development. These
include short-term assistance to offset the pandemic’s economic disrup-
tion, including measures to deal with the mounting debt problems of
HIPC, and strengthening global institutions such as the WHO, to enable
it to anticipate and cope with future pandemics. Additional actions
are needed by developed countries to honor their existing commit-
ments to help developing countries with climate change as well as take
any further steps needed to promote decarbonization and address the
emerging climate crisis. Finally, it is important to refocus the inter-
national community on the continuing developing country needs for
assistance to eradicate poverty, reduce inequality, and achieve the SDGs.
Taking all these actions requires intensive international collaboration
and a revival of multilateralism. The pandemic has reminded everybody
that global multilateral action is needed to deal with global problems
irrespective of the economic systems that prevail in different countries.
International collaboration must take into account the new economic
reality of a large and dynamic China, a territorially aggressive Russia and
the political reality that in the absence of effective systems to support,
those left behind by globalization and technology will continue to be
vulnerable to protectionist, isolationist movements. The experience of
the last fifty years strongly suggests that only a vibrant, multilateral
system provides humanity with the best chance of meeting the chal-
lenges of tomorrow, achieving the SDGs and building a more resilient
and inclusive world.

Reference
Baldwin, R. (2016) The Great Convergence: Information Technology and the New
Globalization, (Cambridge, MA: Belknap).
 2
Growth Constraints, Aid Targets,
and Basic Needs

Introduction
Government-to-government economic assistance programs on conces-
sional terms that aim to promote the development of the recipient is
a post-World War II phenomenon, although there were occasional offi-
cial loans and other assistance in earlier periods. Most consider that
aid started with the US Marshall Plan in 1947.1 In 1960, the Devel-
opment Assistance Group of the Organization for European Economic
Co-operation (OECD, which included European recipients of Marshall
Plan aid and the US) was set up to exchange information on members’
aid activities in developing countries. In 1961, upon the establishment
of the OECD, the Group became the OECD Development Assistance
Committee (DAC). Its mandate is “to consult on the methods for
making national resources available for assisting countries and areas in
the process of economic development and for expanding and improving
the flow of long term funds and other development assistance to them”
(Fuhrer 1996, p. 10).
During these early years, the US provided the bulk of foreign aid
from the OECD countries, about 55% of $3.8 billion in 1957. But 15
© The Author(s), under exclusive license to Springer Nature 9
Switzerland AG 2022
C. Michalopoulos, Aid, Trade and Development, Second Edition,
https://doi.org/10.1007/978-3-030-96036-0_2
Another random document with
no related content on Scribd:
decide whether the claimant of a Patent has a right to it, can it be
sanctioned in granting a privilege blindfold which establishes a
temporary monopoly? According to my view, this is a formidable,
almost insurmountable, stumbling-block, which, in my deliberate
opinion, will always stand in the way of a good and efficient Law of
Patents. I, therefore, am of opinion that no other satisfactory course
is open to us than to abolish Patents.
M. van Voorthuysen will not enter into many details, the subject
having been considered both from a juridical and an economical
point of view. He will, therefore, restrict himself to a few remarks on
M. Heemskerk’s speech. The hon. member acknowledges the
satisfaction the project gives him; it gratifies the feelings to which he
has given vent a great many times. It has been said that the
measure was a step backward, as Patents have taken the place of
exclusive privileges to guilds. At the time the Patent-right was
assuredly an improvement on the then existing system; but we have
been progressing so much since then that at present nothing short of
abolition will satisfy the wants of progress. He also refers to the
conclusion arrived at by Lord Stanley, which point M. Heemskerk has
left unnoticed—viz., 1st, that it is impossible to reward all who
deserve to be rewarded; 2nd, that it is impossible to reward
adequately to the service rendered to society at large; 3rd, that it is
impossible to hold third parties harmless from damage. And, in fact,
the alleged instance of the Daguerre prize having been divided with
another who equally proved his claim to the invention, speaks for
itself. It is doubtful who was the first inventor of the steam-engine;
there are several, at least, who claim the invention as their own.
There is another point he feels bound to refer to. M. Heemskerk has
said that abolishing Patents constitutes an attack upon the right of
property, and that deputy cautions against a first step, perhaps to be
followed up by others. This being a very serious inculpation, the hon.
member has asked the opinion of an eminent jurist, whom he will not
name as yet, whose authority M. Heemskerk is not likely to deny,
and who is in many respects congenial with that esteemed deputy.
The hon. member reads that opinion of one of the foremost
opponents of Patent-right, who calls it an obnoxious and intolerable
monopoly. And who is that clever jurist? It is M. Wintgens, who very
likely owed to his extraordinary acquirements in law matters his
appointment to the Department of Justice in the Heemskerk van
Zuylen Ministry.
M. Fock (Secretary of State for Home Affairs) will not have much
to say, after all which has been argued in yesterday’s and to-day’s
Session, in defence of the project. Nevertheless he will indulge in a
few remarks on the final report. With a view to the same, M.
Heemskerk submits the maintenance of Patents for inventions, but
the repeal of those “of admission.” But the Minister calls the attention
of the House to the circumstance that the Patents for inventions
which are being granted may aggregate to ten a year or thereabout.
What should remain for us to keep? Or else agents here will apply
for Patents on foreign inventions, so that “Patents of admission” will
re-appear under a different denomination. M. Godefroi has already
pointed to instances abroad, and the Minister can but add that,
despite M. Heemskerk’s assertion to the contrary, the Prussian
Government is by no means favourably disposed to the Patent-Law.
In December, 1868, Count von Bismarck addressed a message to
the North German Confederation, embodying the opinion of the
Prussian Government in favour of repeal, and even hinting that
Prussia would not mind taking the lead in the matter.[9] After entering
into a few more details concerning the final report, the Minister once
more demonstrates that Patents are great impediments to industry
and free-trade, and that it is in the public’s interest that they should
be abolished. The Netherlands, having once been foremost in doing
away with the tax on knowledge, must not now shrink from
conferring entire freedom on the field of industry. That is no reaction.
Is it reaction to break off with an intolerable state of things? No; it is
progress, and leads to free development. The Minister concludes
with a citation from Michel Chevalier, and declines to take M.
Heemskerk’s hint of deferring the discussion on the project.
M. Heemskerk Azn replies. He tenders thanks for the urbanity
observed throughout the discussion. But it is undeniable that his
opinion agrees with the existing right and the prevalent ideas in
Europe and America. Of course, if revocation is intended,
improvement of the law has to be given up. In reply to the Minister,
he has no doubt but that the desire for revocation originated in
Prussia, but he has said that in Germany the tide has turned in
favour of Patents, on the strength of the “Deutsche Industrie Zeitung”
and Klosterman’s recent work. The revocation of the Patent-Law
may have been contemplated, but the Prussian Government is not
now disposed to have the idea carried out. He asks but for what the
English equally asked for—i.e., a renewed inquiry. What, after all, is
foreign experience to the exercise of law in the Netherlands? How
does the project tally with the establishment of a new division of
industry in the Department for Internal Affairs, the chief occupation of
which is the granting of Patents? He will not argue with the Minister
on general remarks, but merely on the one relating to the abolition of
newspaper stamps. Why has that tax been repealed? If henceforth a
larger quantity of paper be covered with print, the tax has most likely
been done away with to promote the diffusion of general knowledge.
He supposes, however, the Minister will agree with Cicero, who says
that fame acquired by means of deeds which are not useful is but
vanity. The stamp duty has been repealed in order to be useful. And
in the present case, will the Minister deny all benefits to him who
does his utmost, so as to be useful? He replies also to the several
members who have made speeches; he contradicts M. de Bruyn
Kops about a general disposition supposed to exist in France
towards revocation of Patent-Laws. Michel Chevalier only has
changed his mind, but there is no opinion prevailing against Patents.
Quite recently both Joseph Garnier and Wolowski have refuted
Chevalier’s arguments.
The hon. member further insists upon his interpretation of the
Parliamentary debates in England, and names several instances of
inventors having acquired wealth. He does not admit that there is a
difference between Patent-right and Copyright; imitation of articles of
fabrication is, and will remain, as immoral as it is unfair. He shrinks
from touching the legal side of the question, but asks whether,
because of the Patent-right being restricted to a fixed time, the
conclusion must needs be drawn that absolutely no right should
exist, and that there should be no plea in equity whatever for an
inventor to get rewarded for his labours? Does the abstract question
of occupation of immaterial things cripple that hypothesis in any
way? He considers it from a more general and social point of view,
and vindicates his assertion that an inventor is entitled to a certain
amount of protection for his work, by which, at all events, he renders
a service to society; that Patents are incitements to many useful
inventions and to industry, which is equally M. de Bruyn Kops’
opinion, as stated in his work on political economy. He has been
asked why, when in the Ministry, he did not introduce a Patent
Reform Law. In the first place, he begs to observe that much was to
be done then, and besides, considering the smallness of our country,
he indulged in the anticipation that the idea of an international
agreement might gradually have gained ground. Should he,
however, have lived longer (politically speaking), he would most
likely have introduced a Bill for remodelling the Patent-Law. As for M.
Wintgen’s opinion, it is almost superfluous to say that one is not
bound to have in every respect homogeneous ideas with one’s
political friends. In reply to the question why, as a member of the
House, he does not make a proposal, he accepts the invitation, and
will in September next be prepared to take, as a member of the
House, the initiative of presenting a Bill for Reforming the Patent-
Law, provided the project now pending be no longer discussed.
M. Van Zinnick Bergmann replies, and maintains his opinion
about the justice of the Patent-right.
M. de Bruyn Kops refutes M. Heemskerk’s reply, and
demonstrates, by means of fresh examples, that the Patent-right is
intolerable and most obnoxious. He considers the question now
merely economically; MM. van Houten and Godefroi having so ably
discussed the legal points. The large benefits acquired by a few are,
as taken from his point of view, prejudicial to the public at large, and
against these few advantages there are great damages, as large
capitals dwindle away in the chase for the snare of Patents. M.
Heemskerk himself favours the revocation of Patents on the right “of
admission.” What is left after that? Nothing but the Patents of
invention. Why not try entire freedom and removal of all
impediments?
M. Godefroi will add one word more with reference to M.
Heemskerk’s readiness in accepting the challenge, of framing a new
project of law, and he must say that, whatever be the nature of such
proposal, it can hardly be expected to satisfy those who condemn
the principles of Patent-Law. But the orator who is so well posted
must certainly have framed already the main points from which the
project would have to be formed. By stating and explaining those
points, he would have done more service to the House than by mere
opposition to those who favour abolition. The hon. member repeats
the important query, whether Patents should be granted without
previously inquiring into the merits of the case; and then Government
would have to give its opinion just as well on an improved chignon as
on an improved steam-engine.
M. Gefken gives his motives for voting in favour of the project. He
says, where there is a right of property, it must be permanent, and
even transferable to the heirs; but a guarantee for a few years would
not do. He consequently does not recognise the right of property,
and merely considers the question with a view to usefulness; and, as
far as that goes, his experience in administrative and juridical offices
has taught him that Patents are not actually useful, and, on the
contrary, lead to speculation and impede the development of many a
useful concern. He favours free competition.
M. van Voorthuysen will not revert to M. Bergmann’s remark
about his being accustomed to recapitulate the debates, but denies
having intended to force upon him the authority of M. Wintgen’s
opinion. Such is not the case; but the fact of the opinions of two such
jurists as MM. Godefroi and Wintgen agreeing has set his mind at
rest as far as legal opinion is concerned.
M. Heemskerk Azn replies to M. Godefroi, and does not see why
he should just now go and sketch his project. Give him time and
opportunity, and he will introduce a Bill, provided this project be
deferred; and, in fact, what are they making such haste for?
Minister Fock maintains his sayings about the Prussian
Government favouring revocation, and further explains that the new
division in his department has no connexion with Patents, but was
made so as to concentrate all matters referring to industry. As for the
right of property in inventions, he would merely add that, according
to our legislation, Patents are but favours, which may be granted or
not, as the case may be.
Hereupon the discussion is closed.
With reference to Art. 1, M. Lenting asks, why the date on which
the new law has to take effect should be fixed for the 1st January
next. He would prefer that the words be, “After the day of the
publication of the law;” then no new Patents would be granted, those
already applied for only excepted.
The Minister inserts the amendment, after which Arts. 1 and 2 are
passed.
The project is then put to the vote, and passes the House by 49
ayes against 8 noes.
Against it voted MM. Bichon, Blussé, Vader, Hofmann, Heemskerk
Azn, Van Wassenaer, and Van Zinnick Bergmann.

[8] For this translation I am indebted to the Foreign-office, to

whose reports I have been politely allowed access.
[9] This admirable document is prefixed, see page 185.
 FROM THE DUTCH GOVERNMENT
MEMORIAL.
The project of law, which is accompanied by an extensive
memorial of explanation, contains the following stipulations:—

Article 1.—From and after the 1st of January, 1870, no

fresh Patents for inventions and improvements, or the first
introduction of objects of art and industry, shall be granted,
those only excepted for which application shall have been
made previous to that date.
Article 2.—The term for Patents formerly granted or
deliverable within the provisions of Article 1 of this law may be
extended in accordance with the law of 25th January, 1817.
(Vide “Staatsblad,” No. 6.)

The memorial says, inter alia:—

“In order to let Netherlands industry and Netherlands people reap
the benefit of the bulk of improvements in industry, the best course to
take appears to be the repeal of the Patent-Law.
“The first requisite of a reform of the existing legislation on Patents
would be to more completely guarantee their rights to inventors, they
being by no means sufficiently protected by the provisions of the law
now in force.
“Considering, however, the consequences of any kind of Patent-
Law, the means that are to be employed and the expenses to be
incurred, so as to render all parties interested quite familiar with the
Patents granted; the fact that, in consequence of the development of
industry, the number of Patents is increasing, the result of which is
more and more to burden the exercise of the sundry branches of
industry with a larger portion of obstructive privileges, besides the
abuses and wrong practice to which they lead; in one word, the price
which the public have to pay, compared with the very few inventors,
whose advantage is even at best uncertain—considering all these
points, there can hardly be a doubt as to the choice the Netherlands
ought to make, placed as they are between the dark path leading to
more obnoxious privileges and the highway where freedom of
movement prevails.”
 We subjoin the following, with which we have been favoured, on
the same subject:—
The project of law to repeal the Act of 1817 for granting exclusive
rights on inventions and improvements of objects of art and industry,
has given general satisfaction in four Committees of the House, and
many have received it enthusiastically. By introducing this Bill,
Government has satisfied a desire which of late was frequently
manifested by members of the House. The memorial of explanation,
with its vouchers, gives full particulars of the objections raised
against the Patent system. Most members, in fact, simply gave their
adhesion in substance, without considering it necessary to “motivate”
their opinion.
A few Members of one of the Committees did not agree with
absolute repeal, and even held such a measure to be at variance
with justice and equity; they recognised the law of 1817 to be
defective and in many cases impracticable; they granted that when a
reform might be arrived at “Patents of admission” ought not to
remain in force; but they did not see why, on account of the
insufficiency of the law in this country, “Patents for invention” should
be abolished as well. There are a good many industrial inventions
which cost the originator vast mental labour, sometimes even heavy
pecuniary sacrifice. By means of his invention he renders society a
service which entitles him to enjoy, for a fixed period at least, the
exclusive benefit of bringing it into operation. Should this benefit be
denied him, it would be but fair that the State should give him a
reward; this, however, is subject to difficulties of a peculiar nature.
The opinion that the repeal of the law would leave intellectual
property altogether unprotected, may be refuted by the fact that the
principle of intellectual property cannot possibly form the basis for a
Patent-Law. Although it was emphatically proclaimed in the French
Legislature of the first years subsequent to the Revolution of 1789, it
will not stand the test of sound criticism. Could right of property be
admitted in this case, it ought to be permanent, and not temporary.
Yet no Legislature ever dared to extend the so-called right, even for
the inventor’s lifetime; the terms were generally ten, twelve, fifteen,
and, at most, twenty years. Another circumstance, which is in
downright contradiction with the notion of right of property, is the fact
that everywhere Patents are granted only on payment of a certain
sum.
If Patents are to be defended at all, better try to do it on a principle
of utility. Some appearances are in favour of the plea that
anticipation of reward and pecuniary benefit originates useful
inventions; but pecuniary experience has taught that although every
now and then this may be the case, still the very existence of a strict
Patent-Law, is, on the whole, a decided hindrance to industry; that
the inventor’s benefit from his Patent is, in most instances, but
doubtful, whereas by doing away with this artificial encouragement,
inventions will not, on this account, remain in the bud undeveloped.
A strict Patent-Law is subject to strange drawbacks, which have
been chiefly demonstrated by the inquiry in England; whilst in
Holland the well-known decision of the Supreme Court of 1846 has
well-nigh vitiated it.
Under the circumstances, no choice was left our Government but
between a stricter law than before and complete freedom. Very justly
it has declared in favour of the latter, and, as it states, chiefly
Switzerland in its eye, where very many branches of industry are in a
most flourishing condition, ascribable, in part at least, to the very
absence of Patent-Laws, with their escort of drawbacks and law-
suits. There the manufacturer goes upon his own errand, avails
himself of inventions made by others, and, if he cannot at once get at
the bottom of the same, tries to arrive at them through his own
exertions and his own ponderings.
The step taken by Government deserves the more approbation,
inasmuch as no legislation can sufficiently guarantee to the real
inventor that exclusive right which is considered a reward for the
service rendered to society. Not seldom it happens that the inventor
is a scholar, who makes the fruit of his labours public, leaving to
others the deriving pecuniary benefits from it.
Some persons, adverse to Patent-Laws, cannot yet make up their
minds as to the new system being in accordance with morality, and
perhaps be an encouraging of the dishonesty which lies in the
appropriation of another man’s invention, thereby reminding the
Netherlander of Güttenburg. To this we may bring forward the
argument that, as far as the deed ascribed to that German falls
within the limits of theft, or of violation of contract between master
and servant, nobody will defend it; but in the circumstance that
Güttenburg, having once mastered the art, applied it to bring it into
operation, and by exerting his intellect, raised it to a much higher
pitch of perfection, there lies nothing dishonest. If these proceedings
be incriminated, then the principle ought to be transferred to another
field—that of trade. Then the merchant who takes advantage of a
new outlet or a new branch of commerce inaugurated by another,
ought to be reprobated; but if so, farewell to all competition—nay, to
the very principle of free-trade.
A few of the supporters of the Patent-Law ask whether Copyright
does not rest upon the same basis as the exclusive right to
inventions, and whether the new law will not be followed in its wake
by the ignoring of literary property. But against a few similarities we
have a material difference in substance.
If not all, yet most literary productions bear such a marked stamp
of individuality, that intellectual property cannot be contested.
However it may be, the different subjects have each their own laws,
and both authors and publishers we quite leave out of the question.

OPINION OF THE LEADING JOURNAL OF

HOLLAND, THE “ALGEMEEN HANDELSBLAD.”
In the history of the Netherlands economy, the 22nd June, 1869,
will be long remembered. Whatever shall be the decision of the First
Chamber, the fact of the Law [Bill] having passed the Second
Chamber by 48 yeas against 8 noes is a highly gratifying
occurrence.
The chief feature in the opposition on the part of the Conservatives
was the able speeches made by their leader, M. Heemskerk, in order
to prove that invention confers a right of property. Without going into
the merits of the case, we cannot help recording that, in the opinion
of those that side with M. H., it must be a suggestive circumstance
that, despite all the earnest pleading of the honourable gentleman,
48 out of 57 representatives, of men of the highest moral and
intellectual standing, did vote for abolition, and still did not intend
despoiling anybody of his own.
Invention is the effusion of thought, and just as thought cannot but
be free, so invention must be the same.
We hope that the Netherlands will not long remain alone in this
instance. At any rate, we may be proud of the overwhelming majority
of men able to understand the real means of progress.

EXTRACT FROM AN OBLIGING PRIVATE

LETTER.
Amsterdam, June 28, 1869.
... In some respects, the rather powerful arguments of the
members who were favourable to the continuance of the system of
Patents—and who contended that an inventor, the same as an
author, has a right to protection of his individual mind-work—were
defeated, principally by the pretty general opinion of the majority that
it would be next to impossible to adopt any new Law on Patents
efficient to protect one inventor without at the same time injuring not
only some brother-inventor, but also the public at large.

FROM THE “FRANKFORT JOURNAL,” JULY 21.

The abolition of the Patent-Laws in the Netherlands will, it is
evident, not remain without influence on the decision which other
European States, and in particular those of Germany, will form in
regard to these laws. Of the two countries, one of which is in
possession of the sources of the Rhine, and the other of its mouths
—the former the most industrious country in the world, never had a
Patent-Law; the latter, eminent for its foresight, dispenses with those
laws. Through this act are intensified the unsatisfactory
circumstances which the existence of these laws produces, and the
want of confidence which is felt in their advantage to inventors and
the public. The number of their defenders is constantly declining.
People are daily more and more becoming convinced that these
laws belong to the same category as the Usury-Laws and the Corn-
Laws, and other similar excrescences introduced by bureaucracy,
and that they should be thrown into the lumber-room of laws which
effect the very reverse of what they profess to do. They stop
progress. Inventions of importance can always be made useful to the
inventors without Patent-Laws. Great inventors might perhaps be
indemnified by Government on behalf of a nation, but as for the
innumerable herd of small inventors who prosecute inventing as a
trade, they cause the consumer severe injury instead of benefiting
him. Since Patents for inventions in Germany do not extend to
protection against dealing in foreign articles patented here, we may
consider the abolition of Patents in the Netherlands a reason why
Patent monomaniacs should now ask themselves whether the cost is
likely hereafter to yield a good return.
 PROCEEDINGS IN LIVERPOOL
CHAMBER OF COMMERCE.
At a meeting of the Council on July, 1869, E. K. Muspratt, Esq.,
rose and spoke to the following effect:—
Mr. President,—I rise to call your attention to the late debate on
the Patent-Law. This Chamber has frequently expressed its
dissatisfaction with the working of the present law, and after the
issue of the Report of the Royal Commission on the subject,
endeavoured to bring about an inquiry into the policy of granting
Patents for inventions. I cannot but think the time has now arrived for
further action in this matter. The late debate upon the motion of Mr.
Macfie has re-awakened public interest in the subject, and it is
gratifying to note, both in the debate itself and the subsequent
discussion in the newspapers, that the formerly very prevalent idea
of a natural property in inventions has been tacitly abandoned. In
some of the arguments used the old fallacy seems to lurk, for the
Pall Mall Gazette, in a very able article, says: “It is plausible to say
that if there were no property in invention every one would get the
benefit of all inventions; but this appears to us to have some analogy
to the notion that if there were no property in land every one would
get the benefit of the crops.” There is, however, a very great
difference, because an invention cannot possibly yield all the
benefits which society can derive from it until it becomes public
property; whereas all experience proves that land, in order to yield
the greatest results, must become and remain individual property.
Let us discard, therefore, all comparison of property in invention with
other property, and discuss the subject as one of expediency. Is it
the interest of the community at large that Patents should be granted
for inventions? I am not prepared to say whether or not inventors
should be remunerated by the State; but, after mature consideration,
I have come to the conclusion that, in the interests of the nation and
of all engaged in industry, Patents for invention should be abolished.
A Patent is a monopoly, a patentee a monopolist. When the
Protectionist system was in vogue, Patents which were in full
harmony with that system could be justified; but in these days of
Free-trade all monopolies which act in restraint of trade should be
abolished. Some of the arguments used in support of the system of
Protection to inventors by granting to them a monopoly of
manufacture are, to my mind, very similar to those used in former
days in support of other monopolies. Before the repeal of the
Navigation Laws, it was said that without them our marine would be
destroyed, and no more ships would be built, because there would
be no inducement to build them. Without Patents, say the defenders
of the system, there will be no inventions, because there will be no
special inducement to make them. We maintain, however, that under
a freer system invention would be stimulated, and not restrained. As
was well pointed out by Sir R. Palmer in his able speech, “Bounties
and premiums might be adapted to a rude state of the arts and an
early stage in the progress of commerce; but when a nation had
reached so high a degree of progress in all ingenious arts and
discoveries, and in trade and commerce, as we had, he thought that
in this department, as well as in others, the system of bounties and
premiums was much more likely to be mischievous than useful.” He
then very clearly showed how the Patent system worked; how, in the
place of securing the reward to great and meritorious inventions, it
gave a monopoly to the first claimer of those minor improvements
which he classed as unmeritorious Patents, and which
improvements would necessarily be made in the ordinary progress of
manufacture. As an example of this, I may mention the manufacture
of artificial manures. The modern history of manures dates from the
publication of Liebig’s book in 1840, in which the conversion of
insoluble into soluble phosphate of lime is recommended. This
suggestion has been perhaps more fruitful in results than any other
of modern times, and forms the basis of the enormous manufacture
of super-phosphate and other artificial manures. It was patented in
1842, not by Liebig, but by Mr. Lawes; and since that period various
improvements in the manufacture have been patented, but the real
inventor has never been rewarded. There can be no doubt that
without a system of Patents all of the subsequent minor
improvements would have been made in the ordinary course of
trade; and one of the main objects of the Patent-Law, to secure a
reward to the inventor, has, in this instance, as in many others, failed
of accomplishment. Then, on the other hand, all these minor
improvements, being patented, stand in the way of further progress,
and if the manufacturer wishes to adopt a new process, or to
improve his manufacture, he must do it at the peril of litigation with
some unknown person, who at some time or other has thought fit to
claim for himself a monopoly. No matter whether his claim be good
or bad, it stands in the way of improvement until it is either
disclaimed by the patentee himself or pronounced invalid in a court
of law. As an example of how, under the present system, a patentee
may create a virtual monopoly and embarrass manufacturers even
when his claims are, according to his own showing, to a very great
extent invalid, permit me to draw your attention to a Patent, No.
12,867, a.d. 1849, for compressing peat for fuel, making gas, &c.,
and with which I unfortunately became acquainted, because the
patentee, under another Patent (connected, however, with the first),
endeavoured to make my firm pay him for the use of a substance in
the manufacture of sulphuric acid. Now, the patentee, Mr. F. C Hills,
finding, I presume, that in its first state his Patent was invalid, filed
what is technically termed a disclaimer, in 1853; and on comparing
the original specification, which is very long and consists of about
230 lines, I find at least one-half is disclaimed. This Patent secured
to Mr. Hills the monopoly of the purification of gas by means of oxide
of iron; and although, owing to the exertion of the Liverpool Gas
Company, he failed to have it renewed at the expiration of fourteen
years, by a subsequent Patent for the use of the said oxide (after it
has been used in the purification of gas) in the manufacture of
sulphuric acid, he continues virtually to enjoy that monopoly, and to
prevent chemical manufacturers having access to what, under
certain circumstances, may be a cheap source of sulphur. And this I
would wish you to bear in mind, although the second Patent is
undoubtedly invalid. It would detain you too long were I to enter into
full detail on the subject, but I may mention that our firm used some
2,000 or 3,000 tons of this gas refuse from the Liverpool Gas Works,
when pyrites was high in price; and it was only because of the
annoyance and waste of time which a law-suit would have cost that
we relinquished its use in our manufacture when the price of pyrites
fell. But this case is but a sample, and I have no doubt every
manufacturer has experienced similar loss and inconvenience from
the action of the Patent-Law. When we consider that there are at the
present moment 11,369 Patents in force, most of them as invalid as
that to which I have referred, and acting as a restriction on
manufacturers, we may form some idea of what the community at
large has to pay for the luxury of a Patent-Law. But it may be said
these objections are due to the imperfections and mal-administration
of the Patent-Law. I would refer you, then, to the Report of the Royal
Commission, which, in conclusion, says that “these inconveniences
are, in their belief, inherent in the nature of a Patent-Law, and must
be considered as the price which the public consents to pay for the
existence of such a law.” There is, however, another aspect of the
question which must not be lost sight of. The Lower House of the
States-General of Holland has, by a large majority, voted the
abolition of Patents. In Switzerland they don’t exist; and in Prussia,
owing to a very strict preliminary examination, faithfully carried out,
they are very few in number. We in this country have to compete with
the manufacturers of these countries; and is it fair, I would ask, that
we should be thus weighted in the race? I beg to move that a petition
be prepared for presentation to the House of Commons, praying for
the appointment of a Committee to inquire into the policy of granting
Patents for invention.
(The motion was unanimously adopted.)
 CORRESPONDENCE.
The subjoined letters, with which I am favoured, will be read with
interest and advantage:—

FROM SIR WILLIAM ARMSTRONG, C.B.

As to the cost of the system to the public, I don’t see how it could
be calculated, for it consists not merely of the licence fees, but also
of the loss resulting from the stamping out of competition, which
would cheapen production and, in most cases, lead to improvement.
My great objection to our indiscriminate Patent system is, that it is
scarcely possible to strike out in any new direction without coming in
contact with Patents for schemes so crudely developed as to receive
little or no acceptance from the public, but which, nevertheless, block
the road to really practical improvement.
Nothing, I think, can be more monstrous than that so grave a
matter as a monopoly should be granted to any person for anything
without inquiry either as to private merit or public policy—in fact,
merely for the asking and the paying. Amongst other evils of this
indiscriminate system is that the majority of Patents granted are bad,
and yet such is the dread of litigation, that people submit to a Patent
they know to be bad rather than involve themselves in the trouble
and expense of resisting it. So that a bad Patent, in general, answers
just as well as a good one.
One of the most common arguments in favour of Patents is, that
they are necessary to protect the poor inventor, but it is
manufacturers and capitalists, and not working men, who make great
profits by Patents, and that, too, in a degree which has no reference
either to the merit of the inventor or the importance of the invention.
One rarely hears of a working man making a good thing of a Patent.
If he hits upon a good idea he has seldom the means of developing it
to a marketable form, and he generally sells it for a trifle to a
capitalist, who brings it to maturity and profits by it. He could sell his
idea just as well without any Patent-Law.
May 13, 1869.

FROM ANOTHER HIGH PRACTICAL AUTHORITY,

LIKEWISE A NOTABLE INVENTOR.
I would not for one moment deny that instances could be named in
which the absence of a Patent-Law might have proved a hardship to
a real inventor, but I feel quite satisfied in my own mind that
whatever may hitherto have been the case, the time has now fully
arrived when infinitely less injustice would, upon the whole, be
occasioned by the absence of all Patent-Laws than by the best
Patent-Law that could be devised. All Patents for inventions must be
considered as founded upon expediency and not upon the idea of
any inherent right which the inventor possesses beyond the right of
using his invention, or keeping the secret of it to himself. A
community may consider it to their advantage to protect inventions
by means of Patent-Laws, but a man can have no abstract or natural
right to the exclusive benefits of his invention, for such an idea would
imply that nobody else could have produced it. The question is,
therefore, entirely one of expediency, but not one of right. Again, a
very common argument used in support of a Patent-Law is that an
inventor is as much entitled to an exclusive right to his invention as
an author is to the produce of his pen, but there is really very little
resemblance between the two cases, and I believe it would be very
inexpedient to utterly abolish Copyright. “Paradise Lost” would never
have been written but for Milton; but with the utmost respect for Bell,
Fulton, and Stephenson, who would pretend to believe that without
them we should still have to be dependent upon the wind for our
movements at sea, and the common road ashore? A man who writes
a book does not interfere with me in the slightest degree, but the
inventor, or more probably the so-called inventor, backed by the
Patent-Law, may most unjustly involve me in much trouble and
expense. I should be very glad to see a good round sum set apart by
Government for the purpose of being awarded to real inventors by
competent and impartial authority. Then the poor inventor might have
some chance. You will certainly, in my opinion, have done a good
turn to this country if you can only get every vestige of Patent-Law
swept from the statute-book, and with my best wishes for the
success of your motion, I am, &c.

FROM ANDREW JOHNSTON, ESQ., M.P.

7th July, 1869.
My dear Sir,
I am glad to hear that you intend printing the results of your
inquiries as to the operation of the Patent-Laws, as the conclusions
at which you have arrived tally entirely with my own experience as a
manufacturer.
I had no opportunity of speaking in the recent debate on your
motion, and will therefore put down one or two points which have
specially presented themselves to my attention.
I am not biased, I believe, by self-interest, as the business with
which I am connected has profited to a considerable extent by the
purchase of patented inventions; but it is my firm conviction that the
commonwealth would benefit by the refusal of the State in future to
grant Patents.
Nothing can be more superficial than the objection that the
intelligent working man benefits by the present system. For one such
who really benefits by his invention, ten sell theirs for the merest
fraction of its value; ten others who may get a fair price are led, by
the possession of the capital sum so obtained, to give up regular
employment, and generally “muddle away” all the money in seeking
to “invent” afresh, while the remaining seventy-nine reap nothing by
their invention but disappointment, privation, and misery.
Abolish Patents, and these men would stick to regular work. They
would choose the service of employers who had a name for liberally
rewarding their workmen for ingenious and profitable inventions, and