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The Economic Contribution of Copyright-Based Industries in Bulgaria Oyih-Ae Nutisi Bulgaria in Industries Copyright-Based H Cnmccnrbto of Contribution Economic The

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The Economic Contribution of Copyright-Based Industries in Bulgaria Oyih-Ae Nutisi Bulgaria in Industries Copyright-Based H Cnmccnrbto of Contribution Economic The The Economic Contribution of Copyright-Based Industries in Bulgaria Copyright-Based Industries in Bulgaria The Economic Contribution of 345 Based on the Year 2005 Sofia, May 2007 346 The Economic Contribution of Copyright-Based Industries in Bulgaria Table of Contents Executive Summary 349 Introduction 359 Part One - Artistic Property as a Subsystem of Intellectual Property in Bulgaria 361 Part Two - Methodology of the Research 367 Identification of Codes in the National Classification of the Economic Activities (NKID-2003) and the Related Sources of Data 371 The Problem with “Mixed Codes” in NKID-2003 (the Bulgarian version of NACE) 372 Identification of the Sources of Information for the Selected Codes 373 For the Economic Contribution of the Cultural Institutions at Budget financing 374 Copyright Factor 374 Part Three - Contribution of the Copyright-Based Industries to the Bulgarian Economy 378 1. Evaluation of the overall economic contribution of copyright-based industries 378 2. Distribution of the total economic contribution of the individual groups of copyright-based industries 383 3. Economic contribution of the core copyright industries 387 4. Economic contribution of the interdependent copyright industries 392 5. Economic contribution of the partial copyright industries 397 6. Economic contribution of the non-dedicated support industries 402 7. Economic contribution of the industries in the non-distributable group 404 Copyright-Based Industries in Bulgaria 8. International Comparisons 406 9. Trends in the development of some of the core copyright industries 410 The Economic Contribution of Books and book market 410 Motion picture and video production 412 Radio and television 416 Music and sound recordings 417 Theater, opera and ballet 418 Visual arts 420 Photography 422 Advertising 425 Software industry 428 347 Part Four - Conclusions From the Survey and the Practical Policies Towards the Copyright-Based Industries in Bulgaria 435 348 The Economic Contribution of Copyright-Based Industries in Bulgaria Executive Summary This survey is the first comprehensive study of the contribution of copyright and neighboring rights-based industries to the Bulgarian economy. It was conducted between August 2006 and February 2007 at the request of the Bulgarian Government and with the financial support of the World Intellectual Property Organization (WIPO). The adoption of the NACE international classification of economic activities by the National Statistical Institute (NSI) in 2003 (Bulgarian National Classification of Economic Activities NKID- 2003) was an important precondition for the study, allowing for the application of the WIPO methodology. The data on the years 2003 and 2005 allowed for an evaluation of the real situation at the end of 2005 and the development of these industries over a three-year period. Carrying out this study was an expression of Bulgaria’s adherence to the principle that knowledge protected by intellectual property rights is of key importance for the wealth of nations. This principle, widely accepted among developed countries, has put the copyright-based industries at the forefront of public policy. The OECD countries have developed a relevant infrastructure and boosted the implementation of intellectual property legislation, which has transformed copyright-based industries into one of the most rapidly- developing economic sectors. Since 1998 several Bulgarian governments have made significant efforts to limit the piracy of protected goods and services and to impose intellectual property rights legislation. In 2006 the present government launched a national campaign for the protection of copyright aimed at raising public awareness and further strengthening the implementation of copyright law. The present research forms part of these efforts since it provides objective economic data for designing better policies in the field and can contribute to the general positive change in public attitudes towards copyright-based industries. The methodology of the study is based on a secondary analysis of main economic indicators such as value added, gross output, share of imports and exports and employment, which have been analyzed for each of the copyright-related activities. These activities are classified into four groups – core, interdependent, partial, Copyright-Based Industries in Bulgaria and non-dedicated support industries. The economic contribution of core and interdependent industries is considered as 100 percent copyright related, while for the other two groups a specific copyright factor is The Economic Contribution of applied, following WIPO’s methodology and the experience of researchers in Hungary, the US, Singapore, Latvia, and others. Core industries - those with the highest copyright contribution to the created value added: press and literature; visual and graphic arts; music, theater and opera; photography; motion picture and video; radio and television; advertising; software and databases. 349 Interdependent industries - manufacturing and trade of equipment, instruments and products used entirely or mainly in core copyright industries: computers, photographic and cinematographic equipment, radio and television devices, paper, blank recording materials. Partial industries - those in which only a part of their activities are related to copyright and neighboring rights: apparel, textiles and footwear, furniture, jewelry, artistic arts, toys and games, domestic and home appliances and goods, architecture, activities of museums. Non-dedicated support industries - facilitate distribution and sales of copyright-protected goods and services: telecommunications including the Internet, transportation, general wholesale and retail. Typology of Copyright-Based Industries according to WIPO’s Methodology In its analysis of the manner of collection and calculation of the macroeconomic data applied by the Bulgarian NSI, the survey team concluded that, at present a more appropriate idea of the economic contribution of copyright-based industries can be provided by their share of the gross value added (GVA) at basic prices rather than the gross domestic product (GDP) at market prices. In addition to GVA as its basis, GDP includes indirect taxation, excise and customs duties (all having a greater impact on goods for mass consumption unrelated to creative industries), which changes the basis for comparison by artificially reducing the share of copyright-based industries. In addition the NSI methodology does not take into account the income of such large cultural institutions as the national television, national radio, state and municipal theatres, opera, dance troupes, museums and galleries, etc. (which, according to the experts, exceeds 20 percent of their subsidies). The WIPO methodology has been applied to the most detailed level in the Bulgarian survey – to the primary data by each of the codes of economic activities in the classification of the Bulgarian version of NACE (NKID-2003). This has made it possible to process information about the intangible fixed assets of the companies (including rights on products of intellectual property, software, R&D), net sales, profit from main activities, intermediate consumption and others. The collected copyright-based industries’ economic data for 2003 and 2005 allows for additional specialized analyses of different segments of the copyright-based industries, including in-depth analyses of the most successful and rapidly-developing sectors of software, publishing and printing, and film. These data also form a good basis for future comparison on a national and international level. The Overall Contribution of the Copyright-Based Industries to GDP in 2005 In 2005, gross output of BGN4.155 billion and value added of BGN1.204 billion came from economic activities related to copyright and neighboring rights. The core copyright industries made the greatest economic contribution to the sector with a gross output of BGN2.498 billion and value added of BGN672 million. The Economic Contribution of Copyright-Based Industries in Bulgaria 350 When calculated in comparison to the GDP, the total contribution of the copyright-based industries is 2.81 percent and that of the core industries is 1.57 percent. The economic contribution of the copyright-based industries in 2005 can be represented as follows: The ‘static’ outline of the share of the copyright-based industries’ economic contribution reveals a significant though small sector of the Bulgarian economy. This outline, however, does not give a clear idea of the copyright-based industries growth rates, which put them among the most rapidly-developing sectors of the economy. For the period 2003-2005 the survey identified the gross value added derived from the current Copyright-Based Industries in Bulgaria price index as growing by 50 percent over three years, which exceeded the growth rates of the economy as a whole (11.5 percent). If favorable conditions continued and if the sector received adequate public support, The Economic Contribution of it could become one of the engines for Bulgarian economic development in the near future. Rates of Change in Value Added for 2003-2005 351 Information on the copyright-based industries is obtained as a ratio of the values for 2005 and 2003 adjusted for inflation. The data on the national economy are taken from Table 1.2.22 in 2005 Main Economic Indicators, National Accounts Section (www.nsi.bg). Growth of Copyright-Based Industries for 2003-2005 Employment in the Sector of Copyright-Based
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