The software industry and trade officials who negotiate on software matters at times face incredulity when we encourage countries to step up enforcement of intellectual property rights. Some skeptical officials wonder (even if they don’t say aloud), “What’s in it for us?” They assume — falsely — that enforcing intellectual property rights boosts the profits of multinational firms that create software products but provides no significant benefit to a local economy where the software is being sold.
A new study from BSA and IDC shows that couldn’t be further from the truth. Reducing software theft actually sends ripples of stimulus through local economies. The new study finds that a 10-percentage-point drop in worldwide software piracy over four years would inject more than $142 billion into the global economy, create nearly 500,000 jobs and generate $32 billion in tax revenues. What’s more, 82 percent of those benefits would accrue inside the countries that achieve the piracy reductions.
Why? Because software has an outsized impact on the whole IT economy. Every dollar that is spent on legal software generates $3 to $4 more in distribution and services — and most of that economic activity happens locally.
My hope is that the governments of fast-growing, high-piracy countries like China and India will look at this study and see an opportunity ripe for the taking. China, for example, could spur nearly $16 billion in new economic activity, create more than 250,000 high-tech jobs and generate $4.4 billion in taxes by cutting piracy 10 points in four years. India, meanwhile, could drive $4.4 billion in new economic activity while creating close to 60,000 jobs and generating more than $500 million in tax revenues.
And the opportunity doesn’t end there. The BSA-IDC study also shows that when countries cut the software piracy rate sooner rather than later, they compound the economic benefits. For example, if China were to cut its piracy rate by 10 points in the first two years of a four-year period, it could boost the associated economic activity and tax revenues by 31 percent. India similarly could boost its economic activity and tax revenues by 32 percent if it were to shave 10 points from its software piracy rate in two years instead of four.
So how does a country achieve the necessary reduction in software piracy to capture those benefits? Our new study includes a policy blueprint. In many countries, a majority of the tools it outlines are already in place; it’s just a matter of implementation — and given the economic benefits, robust implementation should be an easy choice.