Banerjee, Khalid and Sturm (2005)
|Banerjee, Khalid and Sturm (2005)|
|Title:||Socio-economic development and software piracy. An empirical assessment|
|Author(s):||Banerjee, D., Khalid, A.M., Sturm, J.E.|
|Citation:||Banerjee, D., Khalid, A. M., & Sturm, J. E. (2005). Socio-economic development and software piracy. An empirical assessment. Applied Economics, 37(18), 2091-2097.|
|Key Related Studies:|
|About the Data|
|Data Description:||The authors track per capita income, Gini coefficient, total revenue from the retail software sector, openness of the economy, degrees of corruption, civil rights and economic freedom on the rate of software piracy using data from 53 countries covering the period 1994 to 1999. The authors specify the sources for the data () but do not go in to any more detail. They do not specify the type of data, or which countries it originated in.|
|Data Type:||Secondary data|
|Secondary Data Sources:|
|Data Collection Methods:|
|Data Analysis Methods:|
|Cross Country Study?:||Yes|
|Government or policy study?:||No|
|Time Period(s) of Collection:||
The high rate of software piracy is a growing concern for software developers as well as businesses and governments. It is argued here that the piracy rate is influenced by expected benefits and costs to the pirates. A model is developed using a set of variables that may affect such benefits and costs and hence piracy rate in a country, and tested for a large sample of 53 countries. The results of this paper suggest that the existing socio-economic conditions and the lack of proper institutions in developing and emerging economies may be responsible for high software piracy rates. One may, therefore, infer that the current trends of globalization and socio-economic development may help software piracy in developing countries.
Main Results of the Study
- Higher per capita income improves the ability to pay for new software, and therefore will lower the piracy rate.
- The piracy rate is not influenced by changes in the Gini coefficient, a measure of income inequality. This is because of the differing effects of inequality on piracy rates.
- In the presence of LNYCAP (Logarithm of per capita gross domestic product in USD), which is a strong measure of ability to pay, the effect of income inequality is dampened.
- Total revenue from the retail software market, as a share of GDP, has a positive and statistically significant effect on piracy rate.
- The results on the inclusion of Openness (OPEN) as an economic factor show that a more open economic environment reduces the incentive to pirate.
- If the market is open, and both legitimate and pirated software are available, buyers can easily see the benefits of buying the legitimate software, which comes with a warranty and an after-sale service. Obviously, this will reduce the demand and shrink the market for pirated software.
- The results show a negative and statistically significant relationship between Corruption Perception Index and the piracy rate.
- The results suggest that greater civil liberty suppresses the incentive for software piracy.
- Countries such as USA and Australia, which have better record of civil liberties, experience a very low piracy rate as compared to very high software piracy in countries like China where civil liberty is often violated.
- Inclusion of economic freedom indicates that economically free economies experience a low piracy rate. It is also true that economic freedom enhances market competition and eliminates distortions. This implies a depressed market for pirated software.
Policy Implications as Stated By Author
- Economic development, more openness, less corrupt governments, softening of political and civil rights would directly influence the benefits or cost of pirating and would thus lead to a reduction in software piracy.
- The recent trend towards globalization and trade liberalization will force the ruling regimes to move from control to a market economy as well as to design and implement policies to control corruption, more economic freedom, civil and political rights.
- China’s accession to the World Trade Organisation (WTO) has important implications for China to take steps towards more transparent policies to control software piracy.
- It may be expected that these measures will help to reduce the rate of software piracy throughout the globe. This will develop a more competitive market for software development.
Coverage of Study
|Level of aggregation:||Country|
|Period of material under study:||1994-1999|