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A Jolt of Stimulus for Local Economies

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.

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.

Robert Holleyman

Author:

As President and CEO of BSA | The Software Alliance from 1990 until April 2013, Robert Holleyman long served as the chief advocate for the global software industry. Before leaving BSA to start his own venture, Cloud4Growth, Holleyman led the most successful anti-piracy program in the history of any industry, driving down software piracy rates in markets around the world.

Named one of the 50 most influential people in the intellectual property world, he was instrumental in putting into place the global policy framework that today protects software under copyright law. A widely respected champion for open markets, Holleyman also was appointed by President Barack Obama to serve on the President’s Advisory Committee for Trade Policy and Negotiations, the principal advisory committee for the US government on trade matters.

Holleyman was a leader in industry efforts to establish the legal framework necessary for cloud-computing technologies to flourish. He was an early proponent for policies that promote deployment of security technologies to build public trust and confidence in cyberspace. And he created a highly regarded series of forums for industry executives and policymakers to exchange points of view and forge agreements on the best ways to spur technology advances and promote economic growth.

Before heading BSA, Holleyman was a counselor and legislative adviser in the United States Senate, an attorney in private practice, and a judicial clerk in US District Court. He holds a bachelor’s degree from Trinity University in San Antonio, Texas, a J.D. from Louisiana State University, and has completed the Stanford Executive Program at the Stanford Graduate School of Business.

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