Counterfeiting and piracy has increased substantially over the last two decades. Today, counterfeit and pirated products can be found in almost every country in the world and in virtually all sectors of the global economy. As policymakers grapple with allocating resources across multiple public policy challenges, better information on the full scope, scale, costs and impacts of counterfeiting and piracy is necessary to ensure that the appropriate resources and prioritization are given to combating counterfeiting and piracy.
Estimates of the level of counterfeiting vary but all estimates agree that counterfeiting represents a multi-billion dollar underground economy with hundreds of billions of dollars of counterfeit product being produced every year.
Building on the OECD’s work
Most recently, the OECD endeavoured to address the lack of in-depth systematic evidence on counterfeiting and piracy and provide governments with a reliable, data-based assessment.
The OECD published an extensive report on the subject in 20081, and concluded that the value of counterfeited and pirated goods moving through international trade alone equalled $200 billion annually, a number they updated in 2009 to $250 billion.
This study seeks to build on the OECD’s work, by updating their estimates and more importantly, introducing and examining categories of impacts identified and discussed but not quantified by the OECD report – the value of domestically produced and consumed counterfeit products, the value of digital piracy, and impacts on society, governments and consumers.
Category 1: Counterfeit and pirated goods moving through international trade. We update the OECD’s estimate of the value of counterfeit and pirated goods moving through international trade, drawing on new customs seizure data indicating that the incidence of counterfeiting and piracy has increased relative to the 2005-based customs data used in the OECD’s 2008 study.
Category 2: Value of domestically produced and consumed counterfeit and pirated products. We develop a methodology, derived from the OECD’s modeling work, to generate an estimate of the value of domestic manufacture and consumption of counterfeit and pirate products – thereby capturing an estimated value of fake products that do not cross borders.
Category 3: Volume of pirated digital products being distributed via the Internet. We describe, evaluate and contextualize industry reports and academic studies on the value of digital piracy of recorded music, movies and software. We then use these studies to produce an estimate of the total value of digital piracy that has been calculated using consistent assumptions and methodology across these industries.
Category 4: Broader economy-wide effects. We provide a summary of previous analysis aimed at identifying the broader economy-wide effects of counterfeiting and piracy.
Before discussing our findings, it is important to be clear about the nature and context of the analysis presented in this report. Since counterfeiting operates outside the law, estimating the exact level of counterfeiting and the harm it brings is extremely challenging. The activities of illegal businesses cannot be measured using the same techniques used for legitimate business concerns.
A report commissioned by business action to stop counterfeiting and piracy (BASCAP).