Does software piracy affect economic growth? Evidence across countries

We examine the effect of software piracy on medium term growth using cross-country data over 2000–2007. While the empirical literature has focused on identifying the causes of software piracy, our contribution is to examine its effects. Our findings suggest that software piracy reduces economic growth over the medium term but the relationship is non-linear – the rate of decrease in economic growth diminishes with piracy increase. This growth-reducing effect is especially pronounced in low income countries. Policy implications are discussed.