Notable Venezuelan Macro-Economist Sary Levy-Carciente unpacks the most recent findings from the International Property Rights Index 2019, with Finland taking the lead, closely followed by the USA, with some surprise headways made by Philippines and Indonesia. Sary Levy-Carciente says the results reinforce the positive relationship between prosperity and a property rights system.
By Sary Levy-Carciente
The close relationship between property and prosperity is a rich vein of research. Many studies have tried to explain the prosperity of countries, being difficult not only to reach an agreement in the definition of prosperity, but also to find a relevant variable to measure it.
Nowadays, we talk about fostering and expanding capabilities or substantial freedoms, highlighting the free and voluntary action of individuals promoting their own well-being. That requires an institutional environment with strong and favorable rules and a set of socio-economic policies stimulating virtues incentives, favoring efficiency, to achieve the desired goals.
One of those essential institutions are property rights. Being human rights consecrated in the UN Declaration (art. 17, 1948), they have proved to be the most effective mechanism to guarantee civil rights and freedoms. Simultaneously they are preconditions for any interchange or transaction, as in trade what happens is a barter of property rights. This way a robust property rights stimulates growth, reducing uncertainty and transactions cost, favoring investment, production, job creation, technological development and a long-term projection.
The International Property Rights Index, IPRI, was developed by Property Rights Alliance to serve as a barometer for the status of property rights across the world.
The IPRI is a relevant tool for policy makers promoting a better quality of life –whether locally, nationally or reaching the countries of an integration agreement; social scientists in their research agendas, and businesspersons and corporations guiding the location of their investments.
2019-IPRI edition ranks 129 countries from around the world that accounts for 94% of world population and 98% of world GDP. On average, the sample yielded a score of 5.726. It comprise three components: Legal and Political Environment (5.16), Physical Property Rights (6.47) and Intellectual Property Rights (5.55).
Finland leads the 2019-IPRI (8.713) as well as the IPR component (8.90) in which it is followed by the USA (8.78). Switzerland ranks 2nd (8.57) followed by New Zealand (8.51), that leads the LP component (8.89). In the 4th place, we find Singapore (8.46) which also leads the PPR component (8.71). On the other extreme we find Rep. of Yemen (2.67), Haiti (2.70) and the Bolivarian Rep. of Venezuela (2.90).
2019 IPRI edition found strong and positive correlations with different elements informing better economic outcomes, strong institutions and innovations.
Simultaneously, countries in the top quintile of IPRI scores show a per capita income almost 16 times that of the countries in the bottom quintile. These results reinforce the significant and positive relationship between prosperity and a property rights system.
Following four of the ASEAN members we find that all of them improved their score compared to 2018 as well as during the last five years. While Philippines and Indonesia show lower scores, they also achieved the most relevant increases during the last five years, particularly Indonesia. Even Singapore located in the top ranks, is still moving ahead improving its scores at an important pace. The IPRI also calculates a gender component, to grasp possible bias within countries, and in this occasion, there is much room for improvement for these four countries.
It is worth insisting that the importance of property rights goes far beyond property ownership, derives from values and principles of appropriation of individual freedom, to the benefits it offers, its ability to promote prosperity and create a virtuous circle for human life in society.
(Ed. Sary Levy-Carciente is a Member of the Board of Directors of the National Academy of Economic Sciences in Venezuela and a full professor at the Central University of Venezuela, where she was Dean of the Faculty of Economic and Social Sciences. Levy-Carciente won the prestigious Fullbright Research Fellowship at the Center for Polymer Studies at Boston University. She is responsible for the calculation and analysis of the International Property Rights Index, developed by the Property Rights Alliance (Washington, DC). Levy-Carciente holds a Doctorate in Development Studies, a Master in International Economics and a Specialization in Administrative Sciences. You can catch the very talented Levy-Carciente in person during her visit to the Adam Smith Center, Singapore Management University on 22 October 2019. Get your tickets here.)