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The trade-off between patents and competition is even more stark. Protection encourages innovation, but temporary monopolies restrict its diffusion. An ideal patents regime will need to optimise information flow among government, universities, and large and small firms. This involves fine-tuning the public domain, setting the bar on patentability and designing carve-outs for downstream research. Besides, the process needs to be dynamic to accommodate economic evolution and factor endowments. All of which contribute to making intercountry comparisons of innovation based on the number of patents granted a fraught exercise.

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