What’s draining U.S. manufacturing revenue?

During a panel discussion at The National Association of Manufacturers (NAM) headquarters, officials unveiled a study - "Economic Impact of Global Software Theft on U.S. Manufacturing Competitiveness and Innovation" that is among the first to prove how stolen software use damages sectors of the U.S. economy beyond the software sector.

The study, by Bill Kerr, associate professor at Harvard Business School, and Chad Moutray, chief economist for the NAM, finds that unfair competition fueled by stolen software is a significant drain on manufacturing in the United States. The authors estimate losses between 2002 and 2012 totaled nearly $240 billion in manufacturing revenue, $70 billion in GDP and 42,220 U.S. manufacturing jobs. 

Coauthor Kerr notes that, “The use of pirated software by foreign manufacturers hurts manufacturers in the U.S. that pay the full cost of their inputs, costing the U.S. economy jobs, revenues, and GDP. This represents an unfair practice that deserves attention.” 

Also presented at the panel discussion were results from a recent survey of NAM members regarding this issue, showing:

• 1/3 of NAM members report theft of IP, trade secrets, or proprietary knowledge being stolen by competitors in emerging markets.
  
• 3 out of 5 NAM members say that IP and trade secret theft impacts their overall global competitiveness, including 1/3 who say it has a strong impact.
  
• Manufacturers are reluctant to do business with firms in emerging markets out of concern for theft or use of IP, trade secrets, and proprietary information in direct competition with their interests.
  
• The Kerr-Moutray study is available here.

The National Alliance for Jobs and Innovation (NAJI), a nonpartisan organization of nearly 400 U.S. member companies and associations, commissioned the study with the NAM.