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1、Modern Economy, 2011, 2, 107-113 doi:10.4236/me.2011.22015 Published Online May 2011 (http://www.SciRP.org/journal/me) Copyright © 2011 SciRes.

2、 ME The Effects of Intellectual Property Rights Violations on Economic Growth Patrick G. McLennan1, Quan V. Le2 1University of Denver, Denver, USA 2Department of Economics, Seattle University, Seattle, USA

3、 E-mail: lequ@seattleu.edu, pmclenna@du.edu Received December 20, 2011; revised March 2, 2011; accepted April 3, 2011 Abstract This paper examines the relationship between intellectual property rights (IPRs) and the gro

4、wth rate of per capita GDP during the period 1996-2006 in a sample 71 countries. Using software piracy data as a proxy for IPR violations, we find that countries with increasing rates of software piracy have lower grow

5、th rates. We also find that states with strong commitments to enact policies to protect intellectual property rights are able to achieve higher growth rates. Keywords: Intellectual Property Rights, Software Piracy, Eco

6、nomic Growth 1. Introduction This paper considers intellectual property rights (IPRs) a fundamental institution for economic growth. We also view the state as equally important because implement- ing laws to protect pr

7、operty cannot be provided through private means; enforcement must come from a legitimate source. Previous studies focus on the ability of the state to produce and distribute IPR protection [1], or its inabil- ity to e

8、nforce them [2]. This paper explores the role of IPR violations on economic growth. Specifically, it fo- cuses on the rates at which software piracy is increasing, which demonstrate deteriorations in IPR protection. We

9、 hypothesize that countries with rising rates of software piracy exhibit decreasing growth rates of per capita GDP. According to the Business Software Alliance (BSA) and International Data Corporation (IDC), software

10、 pi- racy has many negative economic consequences. IDC and BSA’s study revealed that “decreasing piracy by 10 percentage points over four years would add more than 2.4 million new jobs and almost $70 billion in tax re

11、ve- nues to local governments worldwide. Most of that new employment and most of an additional $400 billion in GDP would be added to local economies (p. 6) [3]. Thus, the effects of intellectual property rights violat

12、ions on economic growth are quite clear. Countries with higher rates of IPR violations tend to have lower growth rates. In other words, when business is disrupted, and govern- ments ignore, or take away the ability to

13、 produce legiti-mate capital, people become less productive, leading to lower economic growth. We test the connection between GDP per capita growth and software piracy, along with a governance indicator in a sample o

14、f 71 countries from 1996 to 2006. Although the period is more limited than previous studies, this in- dicator examines a period in which the world has seen increased market integration, especially in the technolo- gy i

15、ndustries. The IDC and BSA [3] state that “the issues in dealing with PC software piracy in emerging markets remain—from a rapid influx of new PC users in the con- sumer and small business sectors, to increased availab

16、il- ity of pirated software over the Internet and difficult en- forcement and education over sometimes sprawl- ing geographies (p. 1)”. Thus, the rise of economic powers in East Asia, along with the ongoing importance

17、of pe- tro-states in the Middle East, gives further context for the study’s importance. Given the fact that most previous studies have focused on the distribution of IPRs or the bureaucratic inefficiencies associated

18、with business growth, this paper gives a unique insight into the role of property rights violations and its effects on economic growth. Given that previous studies have focused on the dis- tribution of IPRs or the bu

19、reaucratic inefficiencies asso- ciated with business growth, this paper provides a unique insight into the role of property rights violations and its effects on economic growth. Software piracy has a nega- tive impact

20、on economic growth because, according to P. G. MCLENNAN ET AL. Copyright © 2011 SciRes. ME 109 laptops, desktops, business applicati

21、ons, consumer ap- plications, operating system, databases, etc. [3]. The fol- lowing formula reflects the method IDC applied to measure piracy rates: 1) determine how much packaged software was put into use; 2) determi

22、ne how much packaged software was paid for or legally acquired; 3) subtract one from the other to get the amount of pirated software; and 4) determine the piracy rate as the percen- tage of total software installed th

23、at was not paid for or legally acquired [3]. The change in the piracy rates, ?PIRACY, is used to measure IPRs violations. This approach has a desirable feature for this study. While the total worldwide weighted aver

24、age piracy rate is 35%, the median piracy rate is 62% in 2006, implying that half of the countries in the BSA and IDC study have a piracy rate of 62% or higher [3]. However, some countries experienced significant pirac

25、y rates drop, while others experienced rates increase. By differentiating we can observe these changes. A positive number implies increasing rates of piracy, while a nega- tive number indicates decreasing rates of pir

26、acy. Table 1 groups the countries into quintiles depicting the change in piracy rates. The table reveals that many developed countries and emerging markets, such as China, India, and South Korea appear to have declin

27、ing rates of piracy. China is a particularly striking example of a declining piracy rate. Between 2003 and 2006, the average annual economic growth rate in China is 9.58%, and the average Table 1. Change in piracy ra

28、tes. Increasing rates of property rights violations Decreasing rates of property rights violations Highest Medium Low Negative Significantly negative 5 to 14 2 to 4 0 to 1 –1 to –3 –4 to –10 Chile Argentina Alg

29、eria Australia China Colombia Cameroon Botswana Austria Costa Rica Panama El Salvador Cote d’Ivoire Belgium Egypt Venezuela Guatemala France Brazil Finland Honduras Hong Kong Bulgaria Ireland Italy Hung

30、ary Canada Japan Peru Kenya Cyprus Jordan Portugal Mexico Denmark Kuwait Spain Nicaragua Ecuador Netherlands Uruguay Senegal Estonia Morocco Zimbabwe Thailand Germany Romania Zambia Greece Singapore In

31、dia Switzerland Indonesia Israel Latvia Malaysia Mauritius New Zealand Nigeria Norway Oman Paraguay Philippines South Africa South Korea Sweden Tunisia Turkey United Kingdom United States Note: Change in Piracy Rates, ?

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