Abstract
Previous literature has used common aggregated indices as a proxy for intellectual property rights (IPR) institutional quality to assess their importance in determining piracy rates. The main contribution of this study is to empirically assess the relative importance of IPR institutional developments by differentiating between provision of laws protecting IPRs and their enforcement. These are observed through a factor analysis comprising different variables reflecting the copyright related laws, regulations, and agreements executed by 85 member countries of the WTO in addition to other economic and institutional characteristics of these countries. Using cross-country software piracy rates as a proxy for IPR violations from 1994 to 2010, our results indicate that per capita income, individualism, literacy, internet spread, the number of IPR laws and agreements in a country, and judicial independence significantly determine the level of a nation’s software piracy rates. On the other hand, international threats by the United States Trade Representative (USTR) do not have a significant impact on the prevailing piracy situation.
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