Protecting property rights take many forms. One aspect is the legal and political environment. At issue are judicial independence, rule of law, political stability, and control of corruption. Notes the PRA report: “Even the most comprehensive de jure property rights cannot be enforced unless a strong rule of law and independent judiciary are present to enforce them.” Political instability and corruption make it harder to acquire and preserve private property, and to benefit from using and improving private property. These factors typically are most lacking in poor Third World states.
Defending physical property rights is one leg of the property stool. One aspect is the strength of independent institutions, most notably the judiciary, standing against attempts to seize private assets. Other aspects include the ease of registering property and borrowing money. Explains the PRA: “access to a bank loan without collateral serves as a proxy for the level of development of financial institutions in a country.”
Another, increasingly important aspect of property is intellectual property rights. Today, with economies increasingly dependent on information and other new technologies, intellectual property is an increasingly important aspect of economic growth and prosperity. IPRI looks at both de jure and de facto protection for intellectual property, as well as strength of patent law and level of copyright piracy.
Useful information about many countries is lacking, which limits the number of states covered by IPRI (such as Haiti, which is absent). However, the 125 nations listed account for 97 percent of global GDP. And the rankings, if not exact, are broadly accurate in assessing national commitments to stronger property rights regimes.
The best performers are the Scandinavian states. Although these governments typically spend more than Washington, they also often regulate with a lighter, more efficient, and less corrupt hand.
In the case of property they tend to be far more protective of individual liberty. The top ten are Finland (number one for the fourth year in a row), Denmark, Sweden, Netherlands, Norway, Switzerland, New Zealand, Singapore, Australia, and Austria. No surprise, all of these nations enjoy productive and prosperous economies.
At the bottom are Bosnia and Herzegovina, Nicaragua, Paraguay, Bolivia, Burundi, Chad, Zimbabwe, Venezuela, Ivory Coast, and Bangladesh. Obviously, much is wrong with these nations, as well as others that rank poorly on the IPRI. However, unless they are able to remedy their flawed property rights regimes, they are unlikely to successfully develop even if they meet their other challenges — end external wars, pacify internal conflicts, overturn dictatorships, and so on.
North America is the freest region. Western Europe is the second. The Mideast and Asia are roughly tied for third‐fourth. Eastern Europe/Central Asia, Latin America, and Africa trail.
The U.S. is only number 15 overall but ties for first regarding IP. America is number 18 on legal/political environment and ties for 11 on physical property. The U.S. did improve overall slightly from 2009 to 2010, though little substantive changed much.
While the relationship is not perfect, nations in the top IPRI quintiles do far better economically than those in the bottom quintiles. Although most countries which protect physical property also promote intellectual property, there are differences of emphasis.
Overall, nations in the top IPRI quintile enjoy an average per capita income of $35,676. The average for the second quintile is $20,087. The third comes in at $9,375. Countries in the fourth quintile have an average of $4,699 while those in the fifth fall in at $4,437. The report includes tables matching IPRI score and per capita GDP. Again, while the relationship between freedom and prosperity is not perfect, it is strongly positive.
Positive IPRI scores relate positively to other economic factors, such as foreign direct investment inflows and GDP growth. The poorest countries are most vulnerable to the adverse effects of economic statism. Wealthy, industrialized nations tend to have a free and prosperous heritage upon which they can rely. Third World states have no such advantage.
The report includes a number of specific case studies. One of the saddest is Venezuela, where all liberties, including private property protections, are under assault. Notes PRA: