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Back to Subjects - Economics

Underground economy

Underground economy The author of the article describe the illicit CD market that is taking place in Ukraine. He explains that 95% of the CDs shipped out the Ukraine are illicit, the producers of those CDs are not just burning low quality CDs, they are even producing their own polycarbonate discs with their own logos as a mark of quality. The International Federation of Phonographic Industry (IFPI), which is actively looking for pirates that counterfeit CDs, seems to be desperate regarding fighting piracy in Ukraine as the law are inadequate and the Ukrainians have little or no knowledge of intellectual property. Those Ukrainians producing illegal copies of CDs are involved in the Ukrainian and European underground economy as they are making profit out of an illegal activity. The author give the example of a copy of Microsoft Office XP CD which cost $ 2.20 in Kiev and the original copy cost $ 580.00 in the USA. Those huge differences in prices are diminishing the profit of companies selling their products on CDs and they are therefore paying less taxes to the government where they are operating. The author of the article conclude by saying that Ukrainian government doesn’t have the will to terminate the illegal copies of CDs as the manufacturer employ lobbyists that exploit the unstable political environment to derail any move from the government to terminate their activities. Furthermore it seems to be very difficult to stop the counterfeiting of CDs as they are on the market before the legitimate versions are released. The author compare the battle against piracy like the war on drugs, one of the similitude is probably the shadowy organized-crime customers that both activities have in common. I believe like the author that it is quite impossible for international companies to sue any of the CD counterfeiter if the Ukrainian government doesn’t take an active part in the banishment of those factories. I also don’t believe that it is the government number one matter of problem, as we know that it is a country that has been going through the communist year and just got out of it, and there are many other important issues that are challenging the country and its government. Finally I think that in a country like Ukraine where bribery is a daily way of making your business happen, and where the counterfeiting factories are employing people when other industries can hardly survive, there is little chance that the government will act soon. Bibliography: Europe’s CD Underworld, ²Welcome to Ukraine, where rip, mix, and burn is a point of national pride² by Jack Boulware, Wired (March 2002)

Word Count: 411