The real impact of counterfeiting on the economy
The market has a simple principle – if there is demand, there will also be offers. Different problems that require solutions give rise to new ideas. Man’s creativity and sense of beauty spawn new, outstanding designs and unique, quality products. They say there is no good brand or product that nobody has tried to imitate, and it should be taken as a compliment when someone attempts to copy your work — it means that it has been noticed.
However, little has been said about the effects of massive copying of products on a particular sector and the state’s tax revenue. Survey results show that legal businesses lose billions of euros in revenue, and countries the just as much in tax revenue from the mass production and sale of counterfeit goods. In addition, counterfeiting loses thousands of jobs.
EUIPO has set up a working group that for years has been involved in assessing economic loss across sectors. For example, the 2016 report shows how counterfeiting has affected the pharmaceutical industry and how big the actual resulting losses were. The latest report, which has also been published on the Estonian Patent Office website, highlights the economic impact of counterfeiting on the tire and battery industries. Based on this report, EU’s legitimate tire manufacturers lose approximately 2.2 billion euros (ie 7.5% of the sector’s sales revenue) and battery manufacturers approximately 180 million euros (ie 1.8% of the sector’s sales revenue) due to counterfeit tires and batteries. As a result, legitimate businesses employ fewer people and nearly 8400 jobs simply disappear. Due to the falsification of tires and batteries, governments lose 340 million euros in tax revenue.
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