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COPYRIGHT + CREATIVITY = JOBS AND ECONOMIC GROWTH
WIPO STUDIES ON THE ECONOMIC CONTRIBUTION OF THE COPYRIGHT INDUSTRIES
World Intellectual Property Organization (WIPO)
Since 2002 the World Intellectual Property Organization (WIPO) supports research on assessing the economic contribution of industries which are dependent on copyright and related rights protection – “the copyright industries” (CRI) . In 2003 WIPO published common guidelines on carrying out such research throughout the world1. This methodology outlines four groups of copyright industries, identified on the basis of their level of dependence on copyright material. It establishes a set of major indicators – contribution to GDP, employment and foreign trade, and lays out research standards and approaches. The WIPO guidelines were developed on the basis of best international practices reviewed by an expert group of renowned economists. The guidelines have been implemented in over 40 countries around the world (30 studies have been completed and published) and their improvement continues with the experience gained.
The present analysis is built on data from 30 national studies which have been finalized until December 20112. The analysis seeks to present the available data in a unified manner in order to facilitate further research and investigation in this area. The data matrix that has been created enables constant update of the overview of results from country studies and the presentation of the variables surveyed. Currently the data base includes over 60 variables, including data from other relevant sources that enhance reporting and analysis on the subject matter. The analysis and conclusions contained in this document present an overview of the performance of the copyright industries in selected countries in terms of macroeconomic indicators, compares this performance with other economic indicators and analyses the structure of this economic contribution, outlining trends and patterns in a comparative perspective. The direct data analysis is followed by a data relationship analysis and a more detailed industry decomposition analysis.
2. Direct data analysis: Country Comparisons
The direct data analysis is based on two major indicators employed to measure performance of the copyright industries: Contribution to GDP (%) and Share of Employment (%). On the basis of the two a labor productivity index is calculated and a country positioning scheme is established.
2.1. Copyright Industries Contribution to GDP and Employment
Chart 1: Overall Contribution of Copyright Industries to GDP and Employment 3
% share of GDP% share of employ
The overall performance of the copyright industries in the countries surveyed indicates the existence of a sizeable sector, which in most countries was found to be beyond the level of expectations. Copyright has often been perceived predominantly as a legal category and has not been analyzed as a growth factor of social and economic importance. The overview suggests that copyright industries have a significant overall economic contribution.
2.1.1. Contribution to GDP
The contribution to GDP varies significantly across countries from over 10% (USA, Australia), to under 2% for Brunei. With the average 5.4%, three quarters of the countries have a contribution between 4% and 6.5%. Three countries in the sample, the United States, Australia and Korea have shares considerably higher than the average. Countries that have experienced rapid economic growth typically have above average share of GDP attributed to copyright industries.
Chart 2: Contribution of Copyright Industries to GDP4
2.1. 2. Contribution to National Employment
The contribution of copyright industries to national employment varies significantly from the share of GDP and stands at an average of 5, 9%. Nearly three quarters of the countries fall in the range between 4% and 7% contribution to national employment. Mexico and the Philippines have by far the highest share of their labor force in the Copyright Industries. Most countries with above average share of creative industries5 in GDP also exhibit above average share of employment.
Chart 3: Contribution of Copyright Industries to National Employment
2.2. Labor Productivity
On the basis of the GDP and employment contributions a Labor Productivity Index is calculated and introduced. Labor Productivity is defined as the ability to produce a given contribution to the national GDP by employing a given share of labor resources. It is calculated as the proportion between the share of GDP, and share of national employment attributed to copyright industries. With 100 being the base, an index above indicates that higher share of creative industries GDP output is achieved with lower share of labor input.
Chart 4: Labor Productivity Index for Copyright Industries
Countries that have the highest calculated Labor Productivity do not necessarily have a high contribution to GDP (with the exception for Korea) which is a deviation from the expected pattern. The analysis suggests that countries with high productivity index have high degree of specialization of their copyright industries and increased value per unit of labor. High monetary value of specific national copyright industries typically results in high labor productivity index.
2.3. Country positioning
The country positioning is analyzed through the four quadrant paradigm. Based on their position along the two indicators, share in GDP and share in employment, countries can be attributed a position on the four quadrants chart. This analysis is of practical use when following a country’s development over time with the goal of monitoring performance tendencies.
The results from the national studies suggest that some of the driving factors that define the position of countries on the plot could be summarized as follows:
• The structural positioning of the sector across countries;
• Positioning of copyright industries in domestic and global markets;
• Monetary value attached to creative products
• National policies in supporting this sector of the economy
• Cultural characteristics and national traditions
Chart 5: Country Positioning based on GDP and Employment
The majority of the countries are clustered either in the upper right quadrant (Q1; high share of GDP, high employment) or in the lower left quadrant (Q3; low share of GDP, low share in employment). Keeping in mind that this clustering is relative to the average contribution of CRI in the sample, it reveals potentially important patterns in the development of CRI over time. The high clustering in Q1 suggests that legal and economic context that stimulates the growth of CRI is beneficial for engaging larger share of the labor force in these industries.
3. Data Relationship Analysis
The data relationship analysis seeks to establish statistically significant relationships between the contribution of copyright industries to GDP and other available indicators and indexes of economic performance.
3.1. Gross Domestic Product per Capita
There is a significant and positive relation between the contribution of copyright industries to GDP and the GDP per Capita6. However, GDP per Capita is not the only factor that affects the economic contribution of copyright industries, as considerable differences exist between countries within the same GDP per capita brackets.
Chart 6: Relationship between Contribution of Copyright Industries to GDP and GDP per Capita
Source: The World Bank Development Indicators
3.2. International Property Rights Index
The International Property Rights Index (IPRI) is an international comparative study that measures the significance of both physical and intellectual property rights and their protection for economic well-being. The Index focuses on three areas:
- Legal and Political Environment
- Physical Property Rights
- Intellectual Property Rights
The study prepared by the Property Rights Alliance7 analyzes data for 129 countries around the globe, representing ninety-seven percent of world GDP.
Chart 7: Relationship between Contribution of Copyright Industries to GDP and the IPR Index
Source: WIPO and Property Rights Alliance
The analysis suggests a strong and positive relationship that exists between the Contribution of copyright industries to GDP and the IPR Index indicating that a well established legal and political system, where both physical and intellectual property rights are respected exerts a positive influence on the copyright-based industries. Countries with the highest share of copyright industries to GDP typically have well functioning property rights legislation.
3.3. Index of Economic Freedom
The Index of Economic Freedom 8 ranks countries on a 1-100 scale according to 10 categories that evaluate economic openness, competitiveness and the rule of law, such as business freedom, trade freedom, fiscal freedom, property rights, freedom from corruption, etc. Countries that score well demonstrate a commitment to individual empowerment, non-discrimination and the promotion of competition. Their economies tend to perform better, and their populations tend to enjoy more prosperity, better health and more positive measures on a variety of quality-of-life indices. Economies rated “free” (scoring 80-100) or “mostly free” (scoring 70-79.9) in the 2011 Index enjoy incomes that are more than three times the average levels in the rest of the world.
Chart 8: Relationship between Contribution of Copyright Industries to GDP and the Index of Economic Freedom
Source: The Heritage Foundation and the Wall Street Journal
Contribution to Copyright industries to GDP exhibits strong and positive relationship with the Index of Economic Freedom. This relationship suggests that creative sector in countries that enjoy more economic freedoms tend to contribute more to national GDP.
3.4. Freedom from Corruption
Corruption erodes economic freedom by introducing insecurity and uncertainty into economic relationships. The score for this component is derived from Transparency International’s Corruption Perceptions Index (CPI) for 2009, which measures the level of corruption in 180 countries. The Index is based on a 10-point scale in which a score of 10 indicates very little corruption and a score of 0 indicates a very corrupt government.
For countries that are not covered in the CPI, the freedom from corruption score is determined by using the qualitative information from internationally recognized and reliable sources.
Chart 9: Relationship between Contribution of Copyright Industries to GDP and the Freedom from Corruption Index
Source: The Heritage Foundation and Transparency International
Contribution of Copyright industries to GDP exhibits strong and positive relationship with the Freedom from Corruption indicator. This relationship is an attestation that in societies where economic activity is less influenced by corrupt practices, creative industries contribution tends to be higher. Greater freedom from corruption is associated with greater transparency and predictability in the institutional context, which is important for investment in creative industries.
3.5. Global Competitiveness Index
The World Economic Forum’s Competitiveness Report and report series, as the world's most comprehensive and respected assessment of countries' competitiveness mirrors the business operating environment and competitiveness of over 140 economies worldwide. The report series identify advantages as well as impediments to national growth thereby offering a unique benchmarking tool to the public and private sectors as well as academia and civil society. In addition to statistical data, the index also features data from the Executive Opinion Survey carried out by the World Economic Forum with over 13,000 business leaders representing the 142 countries in the data.
Chart 10: Relationship between Contribution of Copyright Industries to GDP and the Global Competitiveness Index
Source: The World Economic Forum (WEF)
The analysis suggests that there is a strong and positive relationship between the contribution of copyright industries to GDP and the Global Competitiveness Index. A competitive business environment acts as a catalyst to creative industries performance. There is high level of clustering of the sample at the high end of the competiveness and the GDP contribution scale, and at medium-low end of the scale. The clustering at the high end of the scales suggests that countries with high level of competitiveness have a strong presence of CRI in the economy as CRI are symbols of advanced knowledge, ideas and innovation.
3.6. Global Innovation Index
WIPO and INSEAD are producing in partnership the WIPO- INSEAD Global Innovation Index (GII), recognizing the key role of innovation as a driver of economic growth and prosperity.
The GII acknowledges the need for a broad horizontal vision of innovation that is applicable to both developed and emerging economies, with the inclusion of indicators that go beyond the traditional measures of innovation, to also include:
- Human capital and research
- Market and business sophistication
The GII is evolving into a valuable benchmarking tool to facilitate public-private dialogue, whereby policymakers, business leaders and other stakeholders can evaluate progress on a continuous basis.
Chart 11: Relationship between Contribution of Copyright Industries to GDP and the Global Innovation Index
Source: INSEAD eLab
This indicator has a positive and highly significant relation with performance of the creative industries. This relationship implies that innovation and creativity are inherently and positively connected. The innovation leaders such as developed economies and some of the rapidly growing developing countries (Korea, Singapore, China, Malaysia), but also countries in transition such as Hungary and Slovenia, are a testimony to this close relationship.
3.7. Research and development
This factor is sourced from the World Bank Development Indicators. Expenditures for research and development are current and capital expenditures (both public and private) on creative work undertaken systematically to increase knowledge, including knowledge of humanity, culture, and society, and the use of knowledge for new applications.
Chart 12: Research and Development Indicator
Source: The World Bank
This research and development indicator correlates very highly and significantly with the share of Creative Industries to GDP. Investment in Research and Development appear as an important condition for increasing the contribution of copyright industries to the economy. The leading economies in terms of CRI share to GDP are also leaders in domestic expenditure in Research and Development.
4. Breakdown of the contribution by group and industry
The WIPO methodology distinguishes between 4 different groups of copyright industries in function of the level of dependence on copyright material – core, interdependent, partial and non-dedicated support industries9. This section will review in some detail the contribution of the core copyright industries, while the remaining three groups of industries representing the non-core copyright industries are dealt with in the subsequent section of the report.
More than half of the total contribution of the copyright industries to GDP and employment comes from the core copyright industries.
Chart 13: Contribution of Copyright Industries to GDP and Employment by Groups of Industries.
4.1. Contribution of the core copyright industries to GDP
The pie chart reveals the average break-down of industry formation of the core sector
With 40.5%, Press and Literature is by far the biggest contributor to generating added value. The other driver industries – Software and Databases, Radio & TV, Music & Theatre, Advertising, Motion picture and video exhibit together 55% of the share, with Software and Databases alone standing for almost half of that contribution.
Chart 14: Contribution of Core Copyright Industries to GDP by Industry
10 0%20%40%60%80%100%Press and LiteratureMusic, Theatrical Productions, OperasMotion picture and videoRadio and TelevisionPhotographySoftware and DatabasesVisual and Graphic ArtsAdvertising Agencies and ServicesCopyright Collecting Societies 40.46%5.71%4.07%12.18%2.59%23.19%2.64%8.57%1.05%
Chart 15: Contribution of Core Copyright Industries to GDP by Country
4.2. National diversity
The economic contribution of Copyright industries is not evenly distributed between different industries, and neither between countries. Although Press and Literature appears to have the highest share for most of the counties, it is not the case for all countries.
Chart 15 presents a visualization of the creative diversity across countries represented by the different weight of the creative sector in each nation.
Chart 16: Contribution of Core Copyright Industries by Industry in Specific Countries 0%10%20%30%40%50%60%70%80%90%100%BRU0%20%40%60%80%100%Press and LiteratureMusic, Theatrical Productions, OperasMotion picture and videoRadio and TelevisionPhotographySoftware and DatabasesVisual and Graphic ArtsAdvertising Agencies and ServicesCopyright Collecting SocietiesNE
4.3. Average Share of the Core Industries by Employment
Just under half of the labor force in the Core copyright industries is employed in Press and Literature. The top 5 industries in terms of share of employment account for almost 90% of the total employment. Software and Databases and Radio & TV are the most labor intensive sectors, providing higher contribution to GDP compared to the labor input in them.
Chart 17: Contribution of the Core Copyright Industries to Employment by Industry
Press and Literature Music, Theatrical Productions, Operas Motion picture and video Radio and Television Photography Software and Databases Visual and Graphic Arts Advertising Agencies and Services Copyright Collecting Societies
Chart 18: Contribution of Core Copyright Industries to Employment by Country
4.4. Comparison between the contributions of the Copyright Industries with Other Key Industries in Selected Countries
Chart 19: Contribution of Copyright Industries and Other Sectors of the Economy inSelected Countries
Kenya Croatia Ukraine Jamaica Bulgaria South Africa Bhutan China Slovenia COPYRIGHT Agriculture Education Health & Social Work Fishing Manifacturing Construction Electrical & Water Finance, Real Estate & Business Services Mining and Quarrying Transport & Communication Hotels & Restaurants Wholesale & Retail Sales Public Administration & Defence
Chart 19 suggests that the copyright industries are a sector which is gaining weight in comparison with other sectors. In many countries it is more substantive in size than traditional economic sectors such as agriculture and fully comparable with tourism, hotels and restaurants.
5. Contribution of the non-core copyright industries
The non-core copyright industries are the interdependent, partial and non-dedicated support industries. The analysis suggests a great degree of variability among countries in terms of the overall contribution of the non-core copyright industries to GDP and employment.
5.1. Overall contribution of the non-core group
Chart 20: Major Performance Indicators for the Economic Contribution of the Non-Core Copyright Industries
%share of GDP%share of employment
The positioning of countries presented on Chart 19 and Chart 20 indicates a somewhat different pattern than the contribution of the core sector to GDP.
Chart 21: Contribution of Non-Core Copyright Industries to GDP
Chart 22: Contribution of Non-core Copyright Industries to Employment
5.2. Contribution of interdependent industries
5.2.1. Contribution of interdependent industries to GDP
Chart 20 reveals the average break-down of industry formation of the interdependent copyright industries. With 35% of the share Production of Computers and Equipment is the leader in terms of generated value added among the group of interdependent industries. The top three industries account for over 80% of the share of the subsector
Chart 23: Contribution of Interdependent Industries to GDP
5.2.2. Contribution of interdependent industries to employment
Chart 24: Contribution of Interdependent Industries to Employment
The pie chart reveals the average break-down of industry share of employment of the interdependent non core industries. It indicates that the % employed in the manufacturing of TV sets and Radio is significantly lower than the % employed in the manufacturing of musical instruments. Computer manufacturing remains an area of major importance in terms of job creation in the interdependent group.
5.3. Contribution of the partial copyright industries
The partial copyright industries represent activities where copyright stands only for a portion of the produced value added and employment, weighted with an assigned copyright factor.
5.3.1. Contribution of partial copyright industries to GDP
Chart 25: Contribution of Partial Copyright Industries to GDP
The chart shows that architecture by far provides the highest share of GDP in the group of partial industries.
5.3.2. Contribution of partial industries to employment
Chart 26: Contribution of Partial Industries to Employment
While Architecture still holds the leading position in terms of % employment, it has given way to an increased share of employment in Furniture, Apparel and Toys and Games manufacturing.
5.4. Contribution of non-dedicated support industries
Non-dedicated industries measure secondary impacts and spillover effect of the copyright industries on the economy. The contribution of these industries is weighted with a copyright factor. This information provides insights on the effect of copyright on other spheres of the economy.
5.4.1. Contribution of non-dedicated industries to GDP
Chart 27: Contribution of Non-Dedicated Copyright Industries to GDP
General Wholesale and Retail assures almost half of the contribution to GDP of this group of copyright industries.
5.4.2. Contribution of non-dedicated support industries to Employment
Chart 28: Contribution of Non-dedicated Copyright Industries to Employment
General wholesale accounts for an even higher share of Employment with 56%, followed by a large share (36%) also provided by employment in General Transportation. However, studies containing time series suggest a growing share of internet related services.
6. Creative Industries in the Development Context
Developed Countries perform significantly better both in terms of the share of their copyright industries to GDP and Employment compared to Transition and Developing economies. Their contribution to GDP is 50% higher than the other two country groups, and their % of Employment is 35%, and 30% higher compared to Developing and Transition countries respectively.
Chart 29: Contribution to GDP and Employment by Groups of Countries in the Development Context
Within the Core industries only, Developed countries have a GDP share 75% higher than Transition, and two times higher than Developing countries. Within the Non-Core Industries however, the Developing countries have the highest average share of GDP, as well as the highest share of employment.
Chart 30: Contribution to GDP and Employment by Industry Groups in the Developmental Context Core Creative Industries Non-core Creative Industries 2.43%2.08%2.48%
The Chart suggests that the developed economies produce more value and jobs in their core copyright industries. For the developing world non-core sectors are of higher significance in terms of employment generation and value creation. This conclusion points to the importance of including non-core sectors in any analysis of the copyright contribution, incl. non-direct impacts, which could more accurately capture the economic linkages and spillover effects of copyright in developing economies.
6. Regional Overview
% share of GDP % share of employment
Currently studies are finalized in two countries: Kenya and South Africa. We observe higher contribution to GDP in Kenya and balanced share of GDP and Employment in South Africa. Studies in progress are carried out in Ghana, Jordan, Malawi, Morocco, Nigeria, Tanzania and Sudan.
% share of GDP
Currently studies are finalized in ten countries: Bulgaria, Croatia, Finland, Hungary, Latvia, Netherlands, Romania, Russia, Slovenia, and Ukraine. Studies in progress are being carried out in Lithuania and Albania
6.3. Asia and Australia:
Currently studies are finalized in nine countries: Australia, Bhutan, Brunei, China, Lebanon, Malaysia, Pakistan, Philippines, and Singapore. The Asian economies that have experienced rapid economic growth (Korea, China, Singapore and Malaysia) and also Australia, exhibit above average contribution to GDP. Studies are being completed in Thailand and Indonesia.
6.4. Latin and Central America:
Currently studies are finalized in five countries: Colombia, Jamaica, Mexico, Panama, and Peru. Panama’s CRI exhibit the highest share of GDP in the region. Mexico manifests one of highest share in employment on a global scale. Studies are being finalized in Brazil, Trinidad and Tobago and the East Caribbean States (the OECS).
6.5. North America
% share of GDP
Currently studies are finalized in three countries: Canada, Mexico, and USA.
With 11% of share of GDP, the U.S. is the highest performer in terms of this measure. Canada’s and Mexico’s CRI have a similar share in their respective GDP, but Mexico’s labor force share is double that of Canada.
Note: Mexico appears in both the Latin & North America regions because of its Central American location one hand, and also being connected economically to North America as member of NAFTA, on the other.
6.6. Country profiles
Selected information from the national studies is provided in a country sheet format. The available fact sheets are presented in Annex II.
7. Limitations of the used methodology
The WIPO methodology is only one of the available tools for assessing the economic importance of the creative sector. While this method is gaining acceptance and credibility with each new study which is undertaken, it has to be borne in mind that it has some important limitations, which need to be considered in the interpretation of the results of the studies.
The assessment of the size of the copyright industries is based on the method of measuring the value added, created in the copyright-industries as a percentage of the GDP. The value added approach is a universally adopted industry-centered approach, based on a standardized measurement technique, which allows the identification of the contribution by industry, as recorded in National accounts. The value added method reduces the chances of double-counting; it makes use of input-output tables and indicates important relationships in the economy.
This method has also a number of shortcomings related to its inability to differentiate between copyright-related and non copyright-related activities within a selected industry. It may inevitably also omit some elements, related to copyright in industries which are not included in the study. The method does not disclose which part of the value is added to the product while creating and producing it and which part is added in the modification, distribution or consumption phases of the value chain. This may limit a more in-depth analysis of the copyright industries.
The methodology is based on official data sources as it focuses on comparability between countries. In many cases, however, creative products are produced and distributed in the informal economy and may not be accounted for in national accounts statistics. Same applies for job generation, which may not be fully reflected in census statistics if creative activities fall outside the scope of the adopted statistical survey methodology. This limitation generally reflects an understatement of the employment potential in the copyright industries.
Finally, the surveying of macroeconomic indicators is based on a number of assumptions, the most important of which is that copyright is enforced, i.e. that the economic activities that are measured are based on respect for copyright and related rights. This assumption is needed for the measurement purposes, however the results obtained through the study should not be interpreted as an indication of the strength of copyright enforcement in each individual country.
8. The way forward
The analysis confirms the importance of copyright-based industries in overall economic performance. Creative industries are well connected with the rest of the economy and have an active presence in the economic cycle. In many countries, creative industries are playing a more important role than some traditional industries. Creative industries performance is enhanced when stimulated by governments (economic freedom), the legal system (well established property rights) and the businesses environment (competitiveness, innovation).
National studies confirm the applicability of the WIPO methodology in countries at various levels of development. Developed countries performance in terms of contribution to GDP is higher in core copyright industries, while the developing countries have higher contribution in the non-core industries. New studies that are being carried out across the world will enhance the analysis and the overview of the performance of the creative industries in the global economy.
More broadly representative sample to include a greater share of emerging and developed economies will strengthen the robustness of the analysis. The next steps could involve time series analysis, cluster/regional analysis, deeper examination of the relationships through a statistical model that would seek to disclose closer causal relationships between copyright industries performance measures and relevant explanatory variables.
The merit of further studies and deeper analysis of the copyright industries is in outlining the potential of copyright for development, the need of linking the implementation of a robust copyright regime to the achievement of development objectives. This can be achieved through streamlining and applying uniform approaches to future research. The WIPO model is one possible tool in this direction.
ANNEX 1: Total ShareCoreInterdependentPartialNon-dedecatedTotal ShareCoreInterdependentPartialNon-dedecatedAUSTRALIA200910.307.302.000.400.708.004.971.810.570.65BHUTAN20115.461.900.602.200.7010.091.030.297.161.61BRUNEI20111.580.700.100.700.083.201.500.401.100.20BULGARIA20114.542.741.080.290.444.922.781.340.310.49CANADA20045.383.990.900.110.386.874.000.910.160.33CHINA20096.373.061.920.480.926.523.141.900.850.63COLOMBIA20083.301.900.800.300.405.801.700.701.901.50CROATIA20074.272.990.880.320.074.653.220.930.410.08FINLAND20104.833.700.470.200.465.124.060.430.250.38HUNGARY20107.424.211.790.411.027.284.201.370.581.13JAMAICA20074.811.700.740.471.903.031.790.310.230.68KENYA20095.322.302.170.410.433.261.200.751.040.27KOREA20058.674.032.790.361.494.312.151.060.310.79LATVIA20045.052.901.100.280.775.593.700.700.440.75LEBANON20074.752.530.710.620.894.492.110.73