The effects of counterfeiting on poverty across multiple industries

The first Goal that has been set for 2030 by all United Nations Member States in the Agenda for Sustainable Development is to eradicate poverty. In 2015, 10% of the world population was living in extreme poverty, with troubles in fulfilling vital needs like health, education, and access to clean water and sanitation. (1)

Poverty has many dimensions and among its consequences there are social exclusion, high vulnerability to disasters and diseases. Illegal trafficking, counterfeiting and illicit sale of products and services are jeopardizing the attainment of the first SDG in several ways and sectors.

Causes and consequences of counterfeiting in the agricultural sector

Agriculture is fundamental for our biological and economic survival. Plus, it provides sustenance for the poorest and most vulnerable people. According to the World Bank, the growth in agriculture sectors is at least twice as effective in reducing poverty as the growth in any other sector.(2) This because its flourishing stimulates development in rural areas and provides an essential source of food, directly affecting the well-being of citizens. For this to happen it is fundamental that the sector remains robust and resilient, without corruption issues such as labor exploitation and illegal pesticides lowering productivity and damaging the health of crops. Only in this way it is possible to preserve legitimate jobs and create economic prosperity along the whole food value chain.

Effects of pirated goods

In 2017 Frontier Economics estimated that piracy and counterfeit goods could have a devastating impact on the labor market by putting 5.4 million legitimate jobs at risk, thus increasing the rate of poverty worldwide.(3) In addition to venturing legitimate jobs, counterfeiting activities threaten legal employment. In fact, fakes are often produced under unethical and unregulated working conditions, exploiting the poorest, paid with derisory wages and denied legal, social, or medical care. This situation creates a vicious cycle in which counterfeiters take advantage of indigent people by underpaying them. These people, for their own survival, are forced to work for counterfeiters, nurturing in turn the illicit market.

Counterfeiting in the pharmaceutical sector

Many studies report that fake pharmaceuticals are increasing year by year and are putting at risk public health, especially in developing countries.(4) As a matter of fact, frequently the less affluents in society are the ones that are tempted by the purchase of cheaper, though falsified medical products. However, the health care cost for these people will increase anyways when the fake product turns out to be ineffective or will even cause an adverse reaction. This situation ends up in a tremendous loop of poverty and poor health.

Fight against counterfeit goods

Through its activities, Authena is committed to helping reach the first SD Goal by fighting against counterfeiting and product diversion in Italy, Brazil, UK, Switzerland, and Spain through several projects in all the industries mentioned above. Its end-to-end technology framework can track goods along their entire value chain, allowing real-time monitoring and digital audits. The combination of Blockchain with active and passive IoT devices provides to each product secured by Authena a digital passport that certifies origin, integrity, and authenticity. Finally, the data collected by the product itself along its journey till the end user, provides the next level of market insights and user engagement. With this technology in their hands, brands will be able to drive out fake goods from the market by discouraging their production and will be able to prove their customers the undertaken actions to achieve the UN Sustainable Development Goal of poverty eradication and thus to make the world a better place.

Alessandro Tacconelli

(1) https://sdgs.un.org/goals/goal1
(2) World Bank. (2007). World Development Report 2008: Agriculture for Development. Washington, DC: The International Bank for Reconstruction and Development / The World Bank.
(3) Frontier Economics. (2016). The Economic Impacts of Counterfeiting and Piracy. Brussels, Cologne, Dublin, London, Madrid, Melbourne & Sydney: Frontier Economics.
(4) OECD. (2016). Illicit Trade: Converging Criminal Networks. Paris: OECD Publishing.