The effect of software piracy on research and development intensity at the country level: do developed countries and emerging economies suffer the same impact?

This study investigated the impact of software piracy on research and development intensity at the country level. While the software piracy problem is harmful to innovation in developed countries, it could benefit innovation in emerging economies because the chance to gain access to a wide array of software packages at substantially lower costs encourage more people to develop the technical skills required for innovative activities. The hypotheses were tested using samples from 22 advanced economies and 11 emerging economies from 2003 to 2007. The results suggested that although software piracy negatively affected research and development expenditures, its impact was moderated by the level of economic development. The author also found evidence that software piracy tended to be associated positively and strongly with the percentage of science and engineering graduates in the emerging economies. This could explain why innovation in these countries has not suffered much from the software piracy problem.