Economic consequences of counterfeiting to the right holders are obvious. However, the economic consequences of a widespread counterfeiting business in a country may go much further. Manufacturers of affected products have a direct loss in sale revenues; this is often directly related to losses in tax revenues, and may also result in job losses.
The consequences of counterfeiting touch everyone and are daily hazards. Counterfeiting do not only infringe on intellectual property rights and cause enormous economic losses
Industry world-wide loses large amounts to counterfeiters. These losses not only affect the
producers of genuine items, but they also involve social costs. The ultimate victims of unfair
competition are the consumers. They receive poor-quality goods at an excessive price and are
sometimes exposed to health and safety dangers. Governments lose out on unpaid tax and incur large
costs in enforcing intellectual property rights. There is also an increasing concern that counterfeiting
is related to other criminal activities, such as trade in narcotics, money laundering and terrorism.
It is estimated that trade in counterfeit goods is now worth more than 5 per cent of world trade.
This high level can be attributed to a number of factors: i) advances in technology; ii) increased
international trade, emerging markets; and iii) increased share of products that are attractive to copy,
such as branded clothing and software.
The consequences of counterfeiting
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