The annual global PC software piracy study from the Business Software Alliance (BSA), conducted by IDC, has reported that over a third of all packaged software installed on PCs worldwide in 2005 was illegal.

But the report noted improvements in a number of markets suggesting that education, enforcement and policy efforts are beginning to pay off in emerging economies such as China, Russia, India, Central/Eastern Europe and the Middle East & Africa.

"The progress made in reducing PC software piracy in several emerging markets provides some encouragement, but much more needs to be done," said BSA president and chief executive Robert Holleyman.

"With more than one in three copies of PC software obtained illegally, piracy continues to threaten the future of software innovation, resulting in lost jobs and tax revenues."

Piracy rates decreased "moderately" in more than half of the 97 countries covered in this year's study, and increased in only 19 countries.

The global rate remained unchanged from 2004 to 2005 as large developed markets like the US, Western Europe, Japan and a handful of Asian countries continued to dominate the software market, while their combined piracy rate hardly moved.

Some positive changes were seen in the rapidly developing countries of Russia, India and China.

Russia saw a four point drop in its PC software piracy rate, while India's piracy rate declined two points. China, with one of the fastest growing IT markets in the world, dropped four points between 2004 and 2005.

"This is the second year in a row with a decrease in the PC software piracy rate in China. This is particularly significant, considering the vast PC growth taking place in the Chinese IT market," said Holleyman.

Global losses from software piracy were estimated at $34bn in 2005, an increase of $1.6bn over the previous year.