Competitive Advantage - BSA

Competitive Advantage

The Economic Impact of Properly
Licensed Software

BUSINESS SOFTWARE ALLIANCE A

Contents

Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Value of Properly Licensed Software. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Macroeconomic Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
GDP Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
GDP Return on Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
BSA Blueprint for Reducing Software Piracy. . . . . . . . . . . . . . . . . . . . . . . . . 9
Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
About BSA | The Software Alliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
About INSEAD eLab. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

B BUSINESS SOFTWARE ALLIANCE

Competitive Advantage

Figure 1. Economic Impact of Properly Licensed Software vs.
Pirated Software

$73B

Executive Summary Global Impact of 1% Increase in Use $53 Billion
Additional
Software is an essential tool of production in
Value
every sector of the modern economy. Enterprises of
all sorts rely on it to design products, provide services, $20B
communicate with customers, and manage operations.
But software contributes considerably more value to Pirated Properly Licensed
national economies if it is properly licensed than it does
if it is pirated. €€ On a dollar-for-dollar basis, low-income countries
have the most to gain from increasing their use of
Indeed, properly licensed software has a positive legitimate software — a $437 return on every dollar
impact on national economic activity that is more than invested, compared to $35 for every dollar’s worth of
three times the impact of pirated software, according pirated software put into use in the market.
to a new study from BSA | The Software Alliance. And
the additional economic value associated with lawful €€ While the economic gains from using properly
software use is especially pronounced in developing licensed software over pirated software is greatest
markets: Every dollar invested in properly licensed in lower-income countries, it is significant in middle-
software in low-income countries yields an astounding and higher-income countries, too. There, the national
$437 in additional national production, on average. return on every dollar invested in genuine software is
$140 and $117, respectively.
These are among the findings of an analysis conducted
for BSA by INSEAD, one of the world’s most prominent The enterprise-level performance and reliability
business schools and respected research institutions. dividends of properly licensed software are well
Drawing on data from 95 countries, the study confirms documented — it reduces exposure to security risks and
that increasing use of properly licensed software in a malfunctions, and provides greater operational efficiency
national market corresponds to substantial positive gains than pirated or counterfeit software.
in gross domestic product (GDP). It also reveals that
licensed software has a greater economic stimulus effect But this study shows that properly licensed software is
than pirated software. not just good for business; it is also a more important
driver of national economic growth than pirated
Among the study’s findings: software. Governments therefore should take every
opportunity to promote lawful software use. They should
€€ Increasing licensed PC software use by 1 percent put in place strong laws and enforcement mechanisms
globally would inject $73 billion into the world to protect intellectual property rights, and they should
economy. By contrast, increasing the use of pirated raise public awareness of the risks associated with
PC software by 1 percent would add only $20 billion software piracy and the benefits of managing software
to the global economy — meaning there is a $53 assets carefully.
billion advantage associated with use of properly
licensed software. (See figure 1.)

BSA | The Software Alliance 1

Competitive Advantage

The Value of Properly Licensed Software

It is well established that software includes Macroeconomic Analysis

features and services that generate value for This study seeks to quantify, at the national level, the
enterprises. It creates operating efficiencies that economic value derived from the productivity gains and
enhance productivity. It facilitates communication within operational efficiencies that enterprises achieve with
companies and between companies and customers, software. To that end, researchers at INSEAD employed
and makes enterprises around the world more agile a production function model (see figure 3), which relates
and better able to exploit new market opportunities. changes in various economic inputs — such as labor,
Software is a fundamental building block of business physical capital, or PC software — to national output.
operations today and a valuable intangible asset for A production function determines the “elasticities” of
governments, companies and organizations. national production (GDP) associated with each of these
variables — that is, the extent to which changes in each
Fully licensed software, in particular, improves input correlate with changes in GDP.
effectiveness and efficiencies in enterprises by reducing
exposure to viruses and other security vulnerabilities, Drawing on data from 95 countries that together
meaning fewer system malfunctions, downtime, and IT represent more than 96 percent of the global economy,
repair costs.1 This is because licensed software comes INSEAD’s analysis shows the difference in the economic
with value-added services that provide access to impact of a 1 percent change in the use of legal or
upgrades, patches, and manufacturer support such as pirated software in a given market.
training and problem resolution.
The analysis finds that, in high-income countries,
Capturing these efficiencies on a daily basis delivers properly licensed software is associated with an elasticity
operational and financial gains that help firms reduce of 0.13 percent, meaning that a 1 percent increase in
costs and drive further investment. They are the licensed software use would result in a 0.13 percent
ingredients for more production and national economic increase in GDP, on average. In middle- and low-income
growth, as shown in figure 2.

Figure 2. The Software Value Chain

Licensed • Attached Services Benefits for • Operational Benefits for Economic Growth
Software • Avoidance of Risks • Financial Countries
Firms

1 See: Harrison Group (2011), Genuine Microsoft Products vs. Pirated Counterparts, www.microsoft.com. Users of genuine software enjoy better
performance and reliability than users of counterfeit or pirated software. For example, users of genuine software enjoyed significantly faster boot
times, print times, and loading times for documents and websites.

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Competitive Advantage

Figure 3. The Inputs of National Production, Including Software

Labor Physical ICT Capital PC National
Capital (Non-PC Software Production
(Non-ICT) software)

Properly Pirated
Licensed

countries, the associated benefits are 0.06 and 0.07 GDP Benefit
percent respectively, as shown in table 1.2
Extrapolating from the elasticities associated with
The greater absolute benefit of increasing licensed software, the study shows the GDP benefit of increasing
software use in higher-income countries is largely due legitimate software use by 1 percent varies from country
to their heavier reliance on software tools for economic to country. For example, increasing use of properly
production. licensed software by 1 percent would add $20 billion to
the US economy, $7.6 billion to the Japanese economy,
The impact of pirated software use is less clear. Across and $1.2 billion to the Indian economy.
all countries studied, it is associated with an elasticity
of between 0 and 0.03 percent — at most. There is too Globally, a 1 percent increase in properly licensed
much variability in the results to confirm the results more software use would add $73 billion to world economic
precisely than that.3 output, compared to $20 billion for a similar increase in
unlicensed software use.4 The difference — $53 billion —
Table 1. The Impact of a 1 Percent Increase in Software Use on is the additional economic value created by investing in
GDP fully licensed software instead of pirated software.

Licensed Software Elasticity This added value exists across every market covered in
High-Income Countries 0.13% the study. Table 2 shows the 20 countries with the most
Middle-Income Countries 0.06% to gain from increasing their use of properly licensed
Low-Income Countries 0.07% software.
Unlicensed Software
All Countries Elasticity
0 to 0.03%

2 Countries are categorized using the World Bank income group classification: low- and lower-middle incomes are combined in the low income
category; upper-middle-income in the middle-income category; and high-income in the high-income category.

3 All other inputs in the model are statistically significant within a 95 percent confidence level.

4 Applying the upper limit elasticity of 0.03% for pirated software and income level-specific elasticities for licensed software.

BSA | The Software Alliance 3

Competitive Advantage

Table 2. Additional Economic Value Derived from a 1 Percent Increase in the Use of Properly Licensed Software, Instead of Pirated
Software

Country Additional Country Additional
1. United States Economic Value 11. South Korea Economic Value
2. Japan 12. Netherlands
3. Germany $15.1B 13. Brazil $1.1B
4. France $5.9B 14. India $836M
5. United Kingdom $3.6B 15. Switzerland $743M
6. China $2.8B 16. Saudi Arabia $739M
7. Italy $2.4B 17. Russia $636M
8. Canada $2.2B 18. Sweden $577M
9. Spain $2.2B 19. Poland $557M
10. Australia $1.7B 20. Belgium $538M
$1.5B $515M
$1.4B $512M

GDP Return on Investment The advantage of using properly licensed software
is also evident when comparing its ROI to the ROI of
Another way to assess the value of software to national using pirated software, as shown in table 3. In high-
economies is to calculate the return on investment (ROI) income countries, one dollar invested in legitimate
in GDP from spending on software5 — or the additional software delivers nearly three times the return in national
GDP created by each extra dollar invested in software. production as a dollar’s worth of pirated software. In
Again, properly licensed software delivers a consistently middle-income countries, the return is five times higher,
higher return than pirated software. and in low-income countries the return for properly
licensed software is a staggering 12 times higher than
While the preceding analysis of overall GDP benefit the ROI for pirated software.
finds that higher-income markets have the most to gain
by increasing spending on legal software, it is emerging Table 4 estimates the GDP Benefit and ROI associated
economies that see the greatest returns on a dollar-for- with properly licensed and pirated software across each
dollar basis. of the 95 countries included in the study.6

A one-dollar investment in fully licensed software is Table 3. Return on Investment from Software
associated with an average return of $437 in additional
GDP for low-income countries, compared to $140 for ROI: ROI:
middle-income countries and $117 for high-income Properly
countries. The outsized benefit in low-income countries Licensed ROI: Difference
is because the value of the stock of properly licensed Software
software represents a much lower proportion of overall Pirated in Economic
GDP in these countries, so every extra dollar spent on $117
licensed software has a greater marginal impact. In other Software Value
words, the greatest immediate economic gains to be $140
created by lawful software use are in emerging markets High-Income $42 $75
where licensed software use is lowest. Countries $437
Middle-Income $28 $112
Countries
Low-Income $35 $402
Countries

5 GDP Benefit ($) / $ value of 1% current SW market = ROI per SW $
6 Estimates of national gains are calculated using the average elasticity for each country’s income group. To the extent that a country’s elasticity

deviates from the average, actual gains may vary.

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Table 4. Estimated National Economic Impact of Increased Use of Properly Licensed Software vs. Pirated Software

GDP Benefit GDP Return on Investment
(From a 1 Percent Increase in Software Use)   (From $1 of Properly Licensed or Pirated Software)

Country Properly Pirated Value   Country Properly Pirated Value
United States Licensed Software Difference   Zimbabwe Licensed Software Difference
Japan Software   Zambia Software
Germany ($US M) ($US M) ($US M)   Yemen ($US) ($US)
France 15,094   Cameroon ($US) 1,918
United Kingdom 19,622 4,528   Algeria 74 1,849
China 7,627 1,760 5,867   Bangladesh 1,992 192 1,207
Italy 4,642 1,071 3,571   Cote d’Ivoire 2,042
Canada 3,605 2,773   Kuwait 1,275 68 882
Spain 3,161 832 2,432   Azerbaijan 85 648
Australia 4,391 729 2,196   Oman 967 68 451
South Korea 2,853 2,196 2,195   Senegal 716 23 404
Netherlands 2,257 658 1,736   Albania 474 45 385
Brazil 1,938 521 1,491   Pakistan 449 74 352
India 1,783 447 1,372   Qatar 459 28 346
Switzerland 1,451 412 1,116   Nigeria 380 60 346
Saudi Arabia 1,087 335   Iraq 405 48 324
Russia 1,486 251 836   Kazakhstan 394 65 304
Sweden 1,294 743 743   Sri Lanka 389 23 279
Poland 826 554 739   Indonesia 327 84 272
Belgium 750 191 636   Venezuela 363 28 268
Norway 1,115 173 577   Armenia 300 20 242
Austria 700 557 557   Georgia 288 45 232
United Arab Emirates 669 161 538   Greece 288 21 231
Mexico 665 154 514   China 253 17 194
Indonesia 632 153 512   Saudi Arabia 248 14 191
Denmark 544 146 486   Tunisia 208 12 187
Greece 468 126 419   Bahrain 202 151
Finland 693 108 360   Cyprus 196 8 140
Hong Kong 593 347 347   Morocco 177 26 135
Israel 432 254 339   Egypt 165 25 127
Singapore 388 100 333   Bosnia 174 39 122
Portugal 346 299   Italy 154 27 117
Turkey 317 90 266   Croatia 152 30 117
Ireland 316 80 244   Turkey 156 39 106
Czech Republic 312 73 243   Bolivia 150 33 104
309 73 240 146 40 102
464 72 238 140 36 101
283 71 232 135 34 100
280 232 217 126 26
65 215 144 44 97
65 109 12

BSA | The Software Alliance 5

Competitive Advantage

GDP Benefit GDP Return on Investment
(From a 1 Percent Increase in Software Use)   (From $1 of Properly Licensed or Pirated Software)

Country Properly Pirated Value   Country Properly Pirated Value
Kuwait Licensed Software Difference   Poland Licensed Software Difference
Qatar Software   Dominican Republic Software
New Zealand ($US M) ($US M) ($US M)   Guatemala ($US) ($US)
Hungary 177   Moldova ($US) 97
Argentina 230 53 173   Philippines 25 96
South Africa 225 52 142   Spain 122 18 94
Thailand 185 43 140   Kenya 114 12 93
Colombia 182 42 134   Malta 106 89
Slovakia 268 134 123   Ukraine 5 88
Venezuela 245 123 104   Vietnam 98 20 86
Nigeria 207 104 100   Estonia 109 37 86
Egypt 199 100 96   Slovakia 125 12 86
Philippines 125 29 95   United Arab Emirates 38 84
Malaysia 190 95 94   Peru 98 80
Pakistan 165 71 92   Slovenia 125 8 80
Chile 161 69 90   South Korea 9 80
Oman 157 67 84   Iceland 94 27 78
Ukraine 167 84 84   Ecuador 94 42 78
Croatia 148 63 75   Hong Kong 106 52 78
Luxembourg 149 75 72   Argentina 122 25 74
Algeria 22 66   Romania 132 29 71
Kazakhstan 93 50 64   Hungary 103 41 71
Romania 116 19 60   India 108 25 70
Peru 18 57   Ireland 119 22 63
Slovenia 83 57 56   Portugal 99 32 59
Vietnam 77 56 54   Uruguay 93 20 56
Iraq 113 54 53   Thailand 103 26 56
Bangladesh 112 53 50   Jordan 91 29 55
Morocco 108 15 50   France 89 19 54
Cyprus 106 37 46   Mexico 88 45 50
Sri Lanka 64 35 44   Chile 75 29 49
Bahrain 87 33 40   Colombia 101 16 47
Estonia 81 30 25   Russia 84 12 46
Ecuador 77 24   Bulgaria 70 28 42
Azerbaijan 70 7 23   Czech Republic 63 30 42
Guatemala 32 18 22   Lithuania 77 28 42
Dominican Republic 41 20   Israel 77 20 40
30 7 19 74 34 40
29 7 19 61 17 39
40 20 17 76 16 36
38 19 59 30
33 14 56 29
33 17 70 38
68
74

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GDP Benefit GDP Return on Investment
(From a 1 Percent Increase in Software Use)   (From $1 of Properly Licensed or Pirated Software)

Country Properly Pirated Value   Country Properly Pirated Value
Bulgaria Licensed Software Difference   Latvia Licensed Software Difference
Iceland Software   Costa Rica Software
Tunisia ($US M) ($US M) ($US M)   Brazil ($US) ($US)
Uruguay 16   Singapore ($US) 36
Yemen 32 16 14   Norway 26 35
Kenya 18 4 14   Canada 62 20 33
Lithuania 28 14   Germany 55 26 32
Costa Rica 28 14 14   Netherlands 59 28 30
Bolivia 24 14 13   Belgium 60 50 28
Cameroon 24 10 13   FYROM 81 46 25
Cote d’Ivoire 26 10 12   United Kingdom 73 47 23
Jordan 25 13 10   Malaysia 72 39 22
Malta 17 12 10   Denmark 62 61 22
Latvia 18 10   Finland 83 14 20
Zambia 17 7 9   Australia 54 38 18
Georgia 17 8 9   Austria 57 13 17
Senegal 12 7 9   Switzerland 31 45 17
Bosnia 17 9 8   Japan 62 38 16
Albania 13 3 6   Sweden 55 54 16
Armenia 10 9 6   New Zealand 70 56 16
Zimbabwe 10 6 5   Luxembourg 72 37 14
FYROM 11 4 4   South Africa 54 94 13
Moldova 4 4   United States 108 35 10
8 5 4 48 43 5
7 4 3 53 54 2
7 3 3 59 22 1
6 3 23 46
5 3 47
2

Worldwide Total $73 billion $20 billion $53 billion  

BSA | The Software Alliance 7

Competitive Advantage

Conclusion

Properly licensed software can be an economic

engine, creating significant value for enterprises and
national economies alike. And the benefits of licensed
software — both for firms and national production — are
likely to increase with developments in cloud computing
as it is made easier and more cost-efficient for
businesses of all sizes to opt in to value-added services
delivered over the Internet.
Pirated software, on the other hand, is associated with
a host of risks. It puts end users in legal jeopardy, and it
exposes them to virus infections and security breaches.
More broadly, as shown in this analysis, it produces less
value than licensed software for national economies.
For governments looking at ways to increase economic
growth, the implication is that lowering software piracy
and increasing use of properly licensed software is an
effective way to stimulate innovation, promote firm
success, and generate economic returns.

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Competitive Advantage

BSA Blueprint for Reducing Software Piracy

Increase Public Education and Awareness Step Up Enforcement with Dedicated
Resources
Reducing software piracy requires a fundamental
shift in public attitudes toward software and IP. Public Too often, software theft is not considered a serious
education is critical, therefore, to increase awareness crime and penalties for convicted offenders are too low
of the importance of managing software assets and to provide effective deterrence. Countries can elevate
respecting creative works through compliance with their enforcement of intellectual property by:
software licensing. Experience has shown that public-
private awareness campaigns about piracy and the €€ Creating specialized IP enforcement units at the
value of IP can be extremely effective. In addition, national and local level and providing dedicated
support for industry-led initiatives to promote the resources to investigate and prosecute IP theft;
business practice of managing and optimizing software
purchases, utilization, and maintenance — a process €€ Increasing cross-border cooperation among police
known as software asset management (SAM) — can help and other enforcement agencies to improve
governments, businesses, and other organizations derive coordination for law enforcement in multiple
greater value from software assets by optimizing their countries;
use of licensed applications and reducing piracy. For
example, BSA offers a suite of certification programs in €€ Supporting the training of law enforcement and
standards-based SAM for individual professionals, entire judiciary officials (including establishing specialized
organizations, and auditors. IP courts where appropriate) and providing better
technical assistance to ensure that the people on the
Modernize IP Laws to Account for New front lines of piracy enforcement are equipped with
Innovations the tools they need to deal with the changing nature
of IP theft; and
Around the world, copyright and other intellectual
property laws have lagged behind the pace of €€ Fulfilling their obligations under the World Trade
technology innovation. With the advent of cloud Organization’s Agreement on Trade-Related Aspects
computing and the proliferation of networked mobile of Intellectual Property Rights (TRIPS) by adopting
devices, policymakers should modernize protections and implementing laws that meet international
for software and other copyrighted materials. This norms for civil and criminal IP rights protection. IP
effort should include vigorous enforcement actions — laws also should provide for clear protection and
including against online piracy — and modernization energetic enforcement against misappropriation and
of underlying copyright laws, for example through infringement of new software innovations, such as
implementation of World Intellectual Property cloud computing technologies.
Organization (WIPO) copyright treaties.
Lead by Example

Governments are the largest users of software in the
world. They should demonstrate leadership by ensuring
they are using only fully licensed software in their own
operations. They should also implement SAM programs
and promote the use of legal software in state-owned
enterprises, and among all contractors and suppliers.

BSA | The Software Alliance 9

Competitive Advantage

Methodology

Competitive Advantage: The Economic Impact The input variables included labor, physical capital,
information and communications technology (ICT)
of Properly Licensed Software, published by BSA | The capital, and PC software, as shown in the figure below.
Software Alliance, is a sophisticated statistical analysis For the purposes of this analysis, PC software was
of economic data across a heterogeneous mix of 95 extricated from the broader ICT capital variable and
countries representing 96 percent of global gross demarcated as licensed and pirated software in order to
domestic product (GDP). provide specificity in terms of the discrete GDP impacts
associated with properly licensed and pirated software.
To conduct the research, INSEAD, one of the world’s The commercial values of licensed and pirated software
leading business schools and research institutions, serve as proxies for software use in the model.
utilized an established macroeconomic approach known
as a production function model to analyze the changes The relationship between output and the various
in national output (GDP) that result from changes in inputs, including software, is expressed by the following
various economic inputs. A production function is used national production equation:
to determine the elasticities in GDP associated with
those inputs — that is, the responsiveness of GDP to a Qit = Ait F (Lit, Kit, KITit, Xitl, Xitu)
given change in a particular variable.

The Inputs of National Production

Labor Physical ICT Capital PC National
Capital (Non-PC Software Production
(Non-ICT) software)

Properly Pirated
Licensed

Data Sources for Elasticity Computations

Variable Description Source
Aggregate level of GDP in each country (i) for year (t), expressed World Bank World Development
Qit National in USD Indicators
Production

Lit Labor Measurement of all people that are employed in each country (i) World Bank World Development
for year (t) Indicators

Kit Physical Capital Stock of physical assets such as buildings, roads, bridges, airports, Conference Board, Total
transport equipment and machinery in each country (i) for year (t) Economy Database

KITit ICT Capital Stock of computers, communications equipment less commercial Conference Board, Total
(Non-Software) value of PC software in each country (i) for year (t) Economy Database

Xitl Software Commercial value of properly licensed PC software in each BSA Global Software Piracy Study
— Properly country (i) for year (t) BSA Global Software Piracy Study

Licensed Commercial value of pirated PC software in each country (i) for BSA Global Software Piracy Study
year (t)
Xitu Software — Increases in GDP that cannot be attributed to observed inputs
Pirated in each country (i) for year (t); assumed to come from trends in
technology and other evolving variables
Ait Total Factor
Productivity

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Competitive Advantage

The source data for each country covered an 8-year Converting Elasticity to GDP Benefit
period from 2003–2010.
Applying the elasticities determined by the model,
To compute the elasticities, the production function is the dollar values of the associated increases in GDP
converted into an additive linear empirical equation for properly licensed and pirated software use were
using the logarithmic form of a Cobb-Douglas function: computed using the following equations:

Log Qit = a + b1Log (Lit) + b2Log(Kit) + b3Log(KITit) GDP Benefit of a 1 Percent Increase in the Software Market
+ b4Log (Xitl) + b5Log(Xitu) + eit
GDP Elasticity GDP
In this equation, b1, b2, b3, b4 and b5 are parameters ($) % Benefit
to be estimated and represent the elasticities of output
Q with respect to each input. The term eit represents an ($)
error term, or the amount by which the observed values
of Q deviate from the estimated values as a result of ROI of each $1 Increase in the Software Market
characteristics in a country (such as different work ethics)
that may affect national output but are not measured in GDP 1% of ROI
the equation; and a is a constant term. Benefit Current SW ($)

The equation is estimated using regression analysis ($) Market
with country fixed effects. The model finds that the ($)
highest elasticities are associated with employment (0.53
percent) and physical capital (0.24 percent), as those are For the purposes of this paper, the elasticity values were
the primary inputs of national production. The elasticity applied to GDP and software market data for the year
associated with IT capital is 0.06 percent. Licensed 2011 (see appendix), which was the most current data
software is associated with a global average 0.06 percent available at the time the report was written.
increase in GDP and further segmented by income group
category as outlined in this paper. Pirated software is Computing the Additional Economic Value
associated with an increase of, at most, 0.03 percent in Derived from Properly Licensed Software
GDP. However, there is too much variability in the results
for pirated software for the results to be statistically The difference between the GDP created by properly
significant. Therefore, we can only confirm the elasticity licensed and pirated software use is derived using the
associated with pirated software lies somewhere between following equations:
0 and 0.03 percent. All other inputs are statistically
significant within a 95 percent confidence level. Additional Economic Value (in Terms of GDP Benefits)

Using the same source data, statistical analyses were GDP GDP Additional
carried out in order to check the robustness of the Benefit Benefit Economic
elasticity estimations. INSEAD calculated the estimation (Properly (Pirated
of the elasticities in absolute terms (the impacts of Licensed Value
inputs on aggregate production), and in per-worker SW) (GDP
terms (the impacts of inputs on labor productivity). Both SW) Benefit)
estimations give similar results and confirm the accuracy
of the findings of this report. Additional Economic Value (in Terms of ROI)

ROI ROI Additional
(Properly (Pirated Economic
Licensed Software)
Software) Value
(ROI)

BSA | The Software Alliance 11

Competitive Advantage

Appendix

Supporting Data by Country

GDP 2011 Commercial Value Commercial Value Piracy Rate 2011
($US M) of Properly Licensed of Pirated Software,
23%
Software, 2011 ($US M) 23%
2011 ($US M) 54%
24%
High-Income Countries  1,371,764 2,554 763 27%
Australia 418,484 757 226 53%
Austria 22,946 20 48%
Bahrain* 511,533 798 23 35%
Belgium 252 24%
Canada 1,736,051 3,085 1,141 48%
Croatia 63,850 66 25%
Cyprus 24,690 21 74 37%
Czech Republic 19 26%
Denmark 215,215 397 214 61%
Estonia 332,677 703 222 43%
Finland 25 41%
France 22,185 27 210 48%
Germany 266,071 630 2,754 34%
Greece 2,773,032 4,689 2,265 31%
Hong Kong 3,570,556 6,447 343 48%
Hungary 298,734 219 232 21%
Iceland 243,666 308 143 40%
Ireland 140,029 206 17 59%
Israel 144 20%
Italy 14,059 18 192 43%
Japan 217,275 280 1,945 27%
South Korea 242,929 427 1,875 22%
Kuwait 2,194,750 2,107 815 27%
Luxembourg 5,867,155 7,054 72 61%
Malta 1,116,247 1,223 33 53%
Netherlands 176,590 40%
New Zealand* 50 7 50%
Norway 59,475 132 644 51%
Oman 8,887 33%
Poland 9 99
Portugal 836,257 1,741 289
Qatar 142,477
Saudi Arabia 485,803 351 36
Singapore 781 618
71,782 245
514,496 23
237,522 548 62
172,982 368 449
576,824 255
239,700 62
431
518

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GDP 2011 Commercial Value Commercial Value Piracy Rate 2011
($US M) of Properly Licensed of Pirated Software,
40%
High-Income Countries  Software, 2011 ($US M) 46%
2011 ($US M) 44%
Slovakia 95,994 68 24%
102 51 25%
Slovenia 49,539 60 1,216 37%
461 26%
Spain 1,490,810 1,548 514 19%
1,460 208
Sweden 538,131 1,542 1,943
9,773
Switzerland 635,650 354
5,530
United Arab Emirates 360,245 41,664

United Kingdom 2,431,589

United States 15,094,000

* 2010 GDP used for Bahrain and New Zealand

GDP 2011 Commercial Value Commercial Value Piracy Rate 2011
($US M) of Properly Licensed of Pirated Software,
75%
Software, 2011 ($US M) 84%
2011 ($US M) 69%
87%
Middle-Income Countries  12,960 2 6 66%
Albania 188,681 16 83 53%
Algeria 445,989 295 657 64%
Argentina 10 67 61%
Azerbaijan 63,404 15 77%
Bosnia 18,088 8 2,848 53%
Brazil 2,476,652 2,526 102 58%
Bulgaria 53,514 382 76%
Chile 248,585 57 8,902 68%
China 7,318,499 244 295 58%
Colombia 331,655 2,659 62 76%
Costa Rica 41,007 262 93 54%
Dominican Republic 55,611 92 54%
Ecuador 67,003 45 31 66%
Jordan 28,840 29 123 55%
Kazakhstan 186,198 43 32 57%
Latvia 28,252 22 44 67%
Lithuania 42,725 39 22 63%
FYROM 10,165 27 657 63%
Malaysia 278,671 38 1,249
Mexico 1,155,316 11 209
Peru 176,662 538 207
Romania 179,794 942 3,227
Russia 1,857,770 103
122
1,895

BSA | The Software Alliance 13

Competitive Advantage GDP 2011 Commercial Value Commercial Value Piracy Rate 2011
($US M) of Properly Licensed of Pirated Software,
Middle-Income Countries  35%
South Africa Software, 2011 ($US M) 72%
Thailand 2011 ($US M) 74%
Tunisia 62%
Turkey 408,237 1,047 564 68%
Uruguay 345,649 331 852 88%
Venezuela 18
45,864 322 51
Low-Income Countries  773,091 40 526
Armenia 91
Bangladesh 46,710 85
Bolivia 316,482 668
Cameroon
Cote d’Ivoire GDP 2011 Commercial Value Commercial Value Piracy Rate 2011
Egypt ($US M) of Properly Licensed of Pirated Software,
Georgia 88%
Guatemala Software, 2011 ($US M) 90%
India 2011 ($US M) 79%
Indonesia 83%
Iraq 10,248 4 26 81%
Kenya 110,612 16 147 61%
Moldova 16 91%
Morocco 24,427 59 79%
Nigeria 25,465 2 9 63%
Pakistan 24,075 4 86%
Philippines 229,531 110 16 86%
Senegal 14,367 5 172 78%
Sri Lanka 46,900 31 90%
Ukraine 1,847,982 1,721 52 66%
Vietnam 846,832 239 116 82%
Yemen 115,388 28 2,930 86%
Zambia 33,621 24 1,467 70%
Zimbabwe 5 172 78%
Worldwide Total 7,000 47 84%
100,221 55 85 84%
14 235,923 45 45 81%
211,092 145 91 89%
224,754 3 251 82%
16 278 92%
14,292 123 338
59,172 93  
165,245 2 9
123,961 0.7 86
33,758 0.3 647
19,206 395
  15
9,900
3
63,084,724 4

 

www.bsa.org

Competitive Advantage

About BSA | The Software Alliance

BSA | The Software Alliance is the leading €€ Curbing Software Theft: BSA conducts vigorous
enforcement programs around the world, helping
advocate for the global software industry before its members guard against software theft by taking
governments and in the international marketplace. It legal action against commercial, end-user license
is an association of world-class companies that invest infringement, counterfeiting operations and Internet
billions of dollars annually to create software solutions piracy.
that spark the economy and improve modern life.
€€ Leading Industry Research: BSA publishes the
BSA serves as the world’s premier anti-piracy most authoritative global studies on piracy and its
organization and as a respected leader in shaping public economic impact, illuminating the scope of the
policies that promote technology innovation and drive problem and helping shape national and international
economic growth. policy responses.

Through government relations, intellectual property €€ Educating the Public: BSA educates consumers
enforcement and educational activities in dozens of about harms associated with software piracy and
countries around the world, BSA protects intellectual offers groundbreaking tools and training programs
property and fosters innovation; works to open markets to help organizations more effectively manage their
and ensure fair competition; and builds trust and software assets.
confidence in information technology for consumers,
businesses and governments alike. Opening Markets & Ensuring Fair
Competition
Protecting Intellectual Property & Fostering
Innovation Open markets are essential to economic growth and
prosperity. BSA expands market opportunities for the
Intellectual property rights — copyrights, patents and software industry by working with governments to
trademarks — provide the legal framework for creative break down trade barriers and eliminate discriminatory
enterprise, the bedrock of growing economies. They procurement preferences that stifle innovation by
are also essential to commercial software development, skewing competition.
which is the world’s largest copyright industry.
€€ Breaking Down Barriers to Growth: BSA provides
By working with policymakers, leading enforcement policymakers with information, expert analysis
actions and conducting public-education initiatives and industry insights to promote an open-markets
around the world, BSA ensures that respect for IPR agenda. These efforts include a special focus on
pervades the global economy and society. the BRIC economies, which are the world’s fastest-
growing technology markets but also home to
€€ Championing Intellectual Property Rights: BSA rampant piracy.
works with governments around the world to ensure
intellectual property protections keep pace with new
innovations in technology, such as cloud computing.

BSA | The Software Alliance 15

Competitive Advantage

€€ Promoting Technology Neutrality: BSA encourages About INSEAD eLab
fair competition among technologies by promoting
internationally recognized standards and unbiased As one of the world’s leading and largest graduate
IT-procurement policies for governments.
business schools, INSEAD brings together people,
€€ Supporting New Innovations: BSA works with cultures and ideas from around the world to change
policymakers around the world to create conditions lives and transform organizations. eLab is INSEAD’s
for new technologies, such as cloud computing, to center of excellence in the global knowledge economy.
flourish. In addition to collaborating on technology A key objective of INSEAD eLab is to strengthen links
standards, this work involves elevating intellectual across academia, business leaders and policy makers
property protections, harmonizing international legal by: drawing on a variety of global resources to develop
principles and addressing other challenges that research insights that are academically rigorous and
are beyond the capability or jurisdiction of any one relevant to private and public sector leaders.
company or government.
Information on INSEAD eLab, including other research
Building Trust & Confidence in Technology reports, can be found at insead.edu/elab

Security and privacy undergird trust and confidence
in information technology for consumers, businesses
and governments. BSA promotes responsible data
stewardship and facilitates acceptance and adoption
of each new wave of innovation that transforms the
technology marketplace and creates value for society.

€€ Driving Public-Private Collaboration: Drawing
on the expertise of its members and productive
working relationships with public officials, BSA serves
as a knowledge center and catalyst to encourage
cooperation and forge consensus among industry
and governments.

€€ Protecting Consumers: As new technologies
emerge, such as cloud computing, BSA and its
members develop appropriate privacy and security
standards and share their insights with policymakers
and regulators.

€€ Mapping Policy Solutions: BSA has developed
a global cybersecurity framework to guide
governments in crafting policies that effectively deter
and punish cybercrime, mitigate threats, inform and
protect consumers, and respond to cyber incidents.

16 www.bsa.org