Counterfeit Industry and Impact on Global Economy Essay

Introduction

Counterfeit goods refer to those products that are of lower quality, but the sellers distribute under another brand's name without the owner's consent or information. Arguably, the competitive nature is one of the main reasons for the emergence and development of the counterfeit industry, as new entrants find it challenging to take over from large companies. For instance, the fact that most companies find it hard to compete Coca-Cola in the beverage industry is the reason why some small breweries might decide to use the Coca-Cola brand to sell their products. Whereas counterfeit business remains illegal across the world, the truth is that those who engage in these activities make billions of profits, hence the reason why it is a matter of interest. The fact that only a few independent persons are the ones who benefit from the profits registered by operators from counterfeit business implies that it has a negative impact on the global economy. Arguably, one of the main reasons why it is correct to state that counterfeit industry leads to a decline in the international economy is because it results in loss of employment opportunities, as companies might choose to end their business since they incur losses. The paper provides a detailed analysis of some of the possible means that counterfeit business results in the decline of the global economy.

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i. Increase in Global Unemployment Rates

First, the counterfeit industry has a negative impact on the global economy since it influences an increase in unemployment rates. Notably, employment is one of the critical factors that is used to determine the situation of the global economy, hence the reason why it is crucial that the world has more employed than unemployed persons. Therefore, research indicates that the global economy is growing when more people earn vacancies in the job market, but the economy might also face a decline if there are few numbers of employed people within a particular area. Whereas companies that engage in legal trade hire people through an open system, it is a different situation for the counterfeit industry which has a reduced number of people since they are engaging in illegal activities, hence the reason why it affects the global economy (Calboli and Lee 4). The fact that there is an increase in cases regarding counterfeit business in the world is the reason why most companies are choosing to close their businesses so that they can engage in other activities since they are incurring losses.

Whereas investors are closing their stores since they want to save themselves from the counterfeit industry, the laborers are the ones who remain suffering because of lack of employment, hence the reason why this business has a negative impact on world economy. Therefore, it is vital that authorities should take action against the counterfeit industry to ensure that it does not affect the global economy through an increase in unemployment rates (Cesareo 13). The authority's ability to reduce the number of counterfeit trading's across the world implies that companies will grow and investors will hire more people, hence the reason why the global economy will achieve growth. Moreover, the global economy is interested with the same prosperity of all countries or regions, but counterfeit business limits investor's ability to grow and expand to other areas where they can employ people also to achieve economic growth.

ii. Less Money for Development

Second, the counterfeit business has a negative impact on the global economy since it results in less money for development. There are various factors that determine the growth of the worldwide economy, and this includes schools, hospitals, and roads amongst other factors. Although this is essential factors that determine the situation of the global economy, the truth is that they both rely on public funds. The fact that the government is the one that collects federal funds for the use of development activities implies that they rely on taxes which is part of profits from companies and investors (Enright 18). Arguably, an increase in profits means that the government accumulates more funds for public development, which declines in profit implies that there is a fall in the accumulation of federal funds for economic prosperity.

Whereas the counterfeit industry makes earnings through their illegal trading, they do not pay taxes for general development, thus implying that the money only benefits the individuals. The recent increase in counterfeit trade across the world suggests that governments are losing more money which could be used for development, thus resulting in stagnation on matters regarding expanding the economy (Maskus 9). Subsequently, the global economy will fall since the world will experience stagnant development, hence implying that the authorities must find the right means of ending counterfeit trading activities. One of the possible methods that the government can ensure that they do not lose money to a counterfeit business is ensuring that they impose hefty fines on the suspects, as that it is the only means that they can manage to recover the lost profits for public development.

iii. Demoralizes Innovation which is Important for Economic Growth

The global economy relies on various factors to achieve prosperity, and one of the notable elements include innovation. Arguably, it is impossible for the world to make economic success without change, and technology is one of the possible examples. The fact that inventors have innovated various elements regarding the use of computers and the internet is the reasons why the world has achieved an admirable growth in the last twenty years, thus confirming that innovation is vital for economic prosperity (Phillips 29). Whereas there are many great minds across the world that can innovate and ensure that it benefits the global economy, the truth is that the existence of the counterfeit industry induces demotivation. The decline in morale on matters regarding innovation is because most innovators might feel that they introduced great ideas but other people are the ones who are benefiting from the business (Raustiala, Sprigman and Sprigman 35). Thereafter, there are limited chances that these persons will engage in innovative practices again, as they believe that they will not benefit from the project, but this affects the global economy. It is essential for nations to protect their creative minds from loss of morale, hence the reason why it is vital to impose strict copyright rules. For instance, the government's decision to punish persons who are found guilty of copyright issues implies that the innovators will see a reason to continue introducing great ideas that will benefit the global economy.

iv. Poor Performance amongst Laborers Counterfeits are Health Hazard

Moreover, laborers are also essential persons in any economy, and that is because they are the ones who offer services which ensure that the world economy earns money for prosperity. However, there are various factors which determine the laborer's performance, and one off them is their health condition. Whereas there are increased chances that the laborers will register good results when they are healthy, it is true that their performance declines when they are sick. Moreover, the analysis regarding counterfeit business proves that it is illegal hence the reason why the products are not taken through the Bureau of stands to undergo testing if they are fit for human consumption.

Subsequently, the spread of these products in the market results in widespread use, hence the reason why there are chances that the laborers will be affected by the counterfeit products. The fact that they might make people sick implies that they are dangerous for the global economy, as many businesses will lose their potential workers in the epidemic (Zaman and Zaman 44). Moreover, the fact that counterfeit products are health hazard implies that they are not good for the economy, as this forces people to spend more money on medication while they could have invested it on other important matters. The fact that this can continue for sometimes means that the global economy will suffer a stagnant growth, thus resulting in poor living standards. It is advisable that the authorities should take action that will ensure that they eradicate counterfeit products so that the world can have a healthy society.

v. Imbalanced Global Growth

The discussion on global economy intends typically to highlight issues regarding equal growth across the world. Arguably, it is unrealistic to state that the world has achieved global growth when only a few regions are experiencing prosperity, hence the reason why trade must ensure that there is balanced growth. However, there are chances that the counterfeit industry is terrible for the world since it might influence imbalanced growth. One of the possible means that counterfeit trade can cause imbalanced economic growth is through the decline of investors to invest in specific regions that are affected by the business (Seuba 5). For instance, the fact that the United States has many advanced business persons implies that one might wish to invest in another region, as they intend to ensure that other areas also achieve economic prosperity. However, the truth is that such an investor is also interested in accumulating profits from the business, hence the reason why they expect that the industry will favor their plans. Nonetheless, the existence of counterfeit trade will force such investors to close down their business in the affected area, hence implying that the region will not achieve an equal economic growth like the other areas (Shepard 17). Moreover, the fact that an investor might choose to close their business in a country that is affected by the counterfeit industry means that the locals will lose their employment opportunities, hence making it hard to achieve economic prosperity. Therefore, the best recommendation is that authorities must ensure that each country in the world is a safe trade destination which is free from counterfeit business, as that is the only means that the world will achieve equal growth.

vi. Increase in Criminal Activities

It is crucial to state that crime is one of the leading factors that limit the world from achieving global economic growth. Whereas many people are concerned about how crime affects the global economy, only a few tend to focus on unemployment as one of the main factors which lead to an increase in criminal activities (Wertheimer and Wang 33). Moreover, the previous analysis indicates that counterfeit business is the main reason why companies choose to shut down their operations as they incur losses, hence the reason why people suffer from unemployment. Therefore, it is essential that the responsible persons find the right solution for the counterfeit industry, as that is the only means that they will overcome the increase in criminal activities which limit economic activities.

In brief, the paper has provided a detailed analysis of the counterfeit business. Notably, fake products are those goods that are of low quality, but they use another brand's name to sell their illegal goods. The practice of counterfeit business has a negative impact on the economy, and here are some of the findings from the analysis. First, the counterfeit industry is not good for global prosperity since it increases the unemployment rate. The fact that employment is one of the contributing factors to global success implies that fake business is immense harm to the industry. Second, counterfeit trade is a limiting factor for the global economy since it results in less public money for development. The construction of infrastructures across the world is one of the possible means of measuring economic...