Software Piracy and Productivity: Evidence from Developing Countries.

In this paper, we attempt to investigate the effect of usage of pirated software on productivity by utilizing three distinct indicators of productivity for developing countries and an unbalanced panel data set containing the years between 2003 and 2017. Our hypothesis claims that increase in the use of pirated software enhance the productivity level in developing countries. Firstly, we implemented univariate analyses and the results of univariate analyses implied that the usage of pirated software and productivity are positively and significantly related in all of three models. Secondly, three control variables (i.e., education, investment, and openness) were employed in our three productivity models in order to check if the findings of univariate analyses remain valid and robust. After inclusion of the three control variables, the statistically significant positive association between the use of pirated software and productivity were observed in all models. Regarding to control variables, they take expected signs whenever they are statistically significant. Based on the estimated coefficients of PROD1 models, a 1% positive change in usage of pirated software leads to a rise in a growth in productivity by 0.1023% and 0.0623% in univariate and multivariate models, respectively while a 1% positive change in usage of pirated software leads to a rise in a growth in productivity by 0.1072% and 0.0684% in univariate and multivariate models of PROD2, respectively. Besides a 1% positive change in usage of pirated software induce to an increase in productivity level by 0.0881 and by 0.0601, respectively in PROD3 models. Secondly, three control variables, namely education, investment, and openness, were included in our three productivity models to test if the finding of univariate analyses keeps its validity. EDUC, INVEST, and OPEN variables are taken the anticipated positive influences and they are statistically significant at least at the level of 5%. More specifically, in estimation results for PROD1 model, one percent increase in EDUC, INVEST, and OPEN variables cause to a jump in productivity by 0.2309%, 0.1198%, and 0.7359%, respectively. Openness of an economy has the most explanatory power among all independent variables. In addition to PROD1 model, in estimation results for PROD2 model, one percent increase in EDUC, INVEST, and OPEN variables cause to a jump in productivity by 0.2482%, 0.0893%, and 0.7211%, respectively. Besides a 1% positive change in EDUC, INVEST, and OPEN variables induce to an increase in productivity level by 0.3345%, 0.0341%, and 0.2238%, respectively in PROD3 models. [ABSTRACT FROM AUTHOR]