Journal of Policy Modeling 34 (2012) 284–295 Available online at www.sciencedirect.com Does software piracy affect economic growth? Evidence across countries  Antonio R. Andrés a,∗ , Rajeev K. Goel b a Institute of Public Health, Aarhus University, Bartholins Allé 1, 8000 Aarhus C, Denmark b Department of Economics, Illinois State University, United States Received 1 March 2011; received in revised form 1 June 2011; accepted 1 August 2011 Available online 19 August 2011 Abstract 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. © 2011 Society for Policy Modeling. Published by Elsevier Inc. All rights reserved. JEL classification: O47; O57; K42 Keywords: Software piracy; Economic growth; Intellectual Property Rights; Low-income nations 1. Introduction In the recent years, there is a wide consensus on the key role that Intellectual Property Rights (henceforth IPRs) protection plays in promoting innovation processes and economic growth. Thus, a large number of countries have reformed their copyright systems in order to strengthen the IPRs protection. For example, in its 1998/99 World Development Report, the World Bank  The authors’ names appear in alphabetical order and no seniority of authorship is implied. Helpful comments by the Editor and referees and research assistance by Michael Naretta are appreciated. ∗ Corresponding author. Tel.: +45 89423122. E-mail address: ara@folkesundhed.au.dk (A.R. Andrés). 0161-8938/$ – see front matter © 2011 Society for Policy Modeling. Published by Elsevier Inc. All rights reserved. doi:10.1016/j.jpolmod.2011.08.014