A new study says software piracy continues to rise in Canada, and the country is falling behind the United States in efforts to fight it.

According to a study by The Canadian Alliance Against Software Theft, 36 per cent of the software used in Canada last year was pirated, an increase of one per cent since 2003. In the U.S., the rate of software piracy declined one point to 21 per cent.

The independent study, conducted by global technology research firm IDC and released by CAAST and the Business Software Alliance, concludes software piracy is costing the Canadian economy $1.1 billion in lost retail sales of software.

"It's disappointing to see that Canada's piracy rate is not following the decline seen in countries such as Sweden, the United Kingdom and the U.S.," says Jacqueline Famulak, president of CAAST. "In Canada, more than one third of all software applications in use are illegal. This has a profound impact on our economy because every copy of software used without proper licensing costs tax revenue, jobs and growth opportunities."

According to the study, the highest piracy rates were in Ukraine, China and Zimbabwe, where 90 per cent or more of all software is pirated. Emerging markets in Asia Pacific, Latin America, Eastern Europe and the Middle East and Africa account for over one-third of PC shipments today, but only a tenth of spending on PC software.

"Piracy is still most prevalent in countries and regions where the software market is growing as personal computing becomes more integral to work and daily life," says John Gantz, chief research officer at IDC.

According to the study, aggressive policies to protect intellectual property are key to curbing software piracy.