Is piracy really a threat to international trade?
Peter Parks/AFP/Getty Images International trade losses resulting from product counterfeiting and piracy are likely to have been under $200 billion in 2005, according to an upcoming report by the Organization for Economic Cooperation and Development. The amount is significantly lower than comparable estimates from the business world, which tend to hover around $600 billion or ...
Peter Parks/AFP/Getty Images
International trade losses resulting from product counterfeiting and piracy are likely to have been under $200 billion in 2005, according to an upcoming report by the Organization for Economic Cooperation and Development. The amount is significantly lower than comparable estimates from the business world, which tend to hover around $600 billion or more. But business groups maintain that the higher figure is correct, and that the piracy problem is escalating.
Who’s right? Businesses certainly have the motive to inflate figures: The perception that intellectual property violations are a minor problem could undermine efforts to get governments to crack down on violators. But more broadly, I wonder: Are the ubiquitous fake Louis Vuitton or Gucci bags sold on the streets in many Asian countries really a threat to the luxury boutique stores? The vendors of fake goods are marketing to an audience that has little overlap with the consumers of luxury brands. People that can afford high-end products are unlikely to see forgeries as a substitute, and people that can’t afford luxury brands wouldn’t buy them anyway. Of course, the case is different if the consumer is unaware the item is a fake (but really, if you buy the bag from a little shop in a side street, it’s a pretty good indication), or if the product in question is a pharmaceutical good, for instance. But even so, it shouldn’t be particularly surprising that the actual international trade losses are substantially lower than what business groups claim.
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