Europe: An analysis of the International Property Rights Index

by Sven Sydow*

Property is one of the most important factors for freedom and economic prosperity in a country. Strong property rights are important for western civilizations. Since 2007 the IPRI has proven the most intensive and far reaching studies between property rights and economic prosperity, in 129 countries with 93.66 percent of the world population. The IPRI 2015 shows big disparities between countries that can guarantee and secure a system of property rights and other administrations that fail to do so. Austrian IPRI score decreased by 0.2 amounting to 7.6 points. It is positioned 10th in the regional Western European countries ranking, and 17th globally. The IMF classified Austria as an advanced economy. The World Bank lists it as a high income country. Austria’s Legal and Political Environmental sub-index remained constant since 2013. The judicial independence decreased by 0.3 to 7.0 points. The factor control of corruption increased by 0.3 to 8.0 points. The Rule of Law amounting to 8.7, and Political Stability equal to 7.7, are constant. The Physical Property Rights sub-index decreased by 0.5 to 6.8 points. The component scores were: Property Rights that decreased by 0.3 to 8.1 points, Ease of Access to Loans decreased by 1.2 to 3.1 points, and Registering Property remained constant at the level of 9.3 points. The Property Rights decreased because of the over regulation and the continually increasing tax burden. The over regulation cloges the economic growth in Austria.[i] The Intellectual Property Rights ub-index decreased by 0.1 to 8.0 points. The main scores were the Intellectual Property Protection, which decreased by 0.3 to 7.5 points, the Copyright Privacy increased by 0.1 to 7.8 points and Patent Protection remained constant – 8.7 points. I think Austria loses by the main score because more Austrian patents would rather be registered in China than in Austria. From 2010 to 2014, the number of patents registered and issued in China, had doubled from 550 in 2010 to 1072 in 2014.[ii]

There are two big disparities in the European Union, not only between the North and the South, but also between the West and the East like the data of the European countries from the International Property Rights Index shows us.[iii] One example for the big divergences between North and South is a comparison by the property between Finland and Greece. Finland is on the top of the regional and global ranking, whereas Greece is on the 56th place as regards the global ranking and at the bottom of the regional ranking with its 19th place. Finland decreased in score from 8.5 points in 2014 to 8.3 in 2015. At the same time, Greece received the same score 5.3, the same result as in 2014. In the Legal and Political sub-index Finland lost 0.1 points, whereas Greece remained at the same level as for the previous year. In both countries the Judicial Independence went down, in Greece we have a fall from 5 points to 4.4 and in Finland we have a slight loss in 0.1, resulting in 9.3 points overall. In Greece we can see stabilization on a low level, according to the Physical Property Rights Index, the situation is constant with 5.1 both for 2014 and 2015. In Finland the Physical Property sub-index fell from 8.2 to 7.6 points.

The biggest problem for Greece is the Protection of Intellectual Property. In 2015 this country is on the last place for the Copyright Protection and on the 17th place for the Protection of Intellectual Property Rights. In the ranking of that main component index, they are with 5.8 on the last place by the regional ranking and on position 40 from 129 in the global ranking. Finland is the opposite of Greece in that respect. We can see very good scores for indicators like Protection of Individual Property Rights and Copyright Protection.[iv] The best example for the economic divergence between countries belonging to the former Soviet Union and Western European countries, is the comparison between Luxembourg and Latvia. Luxembourg is, with 8.3 points, on the 4th position of the global ranking, and on the third place of the regional ranking. Whereas Latvia is on the 52th position of the global index and on the 7th place of the regional ranking. In Latvia the score decreased from 5.7 to 5.5. Luxembourg has good scores for all indixes and sub-indixes, especially for the Legal and Political Environmental. In the subcategory Control of Corruption Luxembourg received 9.2 points in 2015. But also on the Physical Property Rights index, this country got good scores for the Protection of Physical Property and Access to Loans. In comparison to Latvia with its 4.7 points, Luxembourg gets 8.0 points. It is on 3rd position for this subcategory and as regards the regional ranking it is based on        the top. Latvia is constant in terms of Legal and Political Environment with its 5.8 points. On other sub-indixes, like Physical Property Rights and Intellectual Property Rights, there is a slow decrease from 6.3 points to 6 by the former and from 5 to 4.8 points for the latter.[v]

To sum it up, I can say that there are big divergences in terms of legal guaranties and the security of property rights in the EU, especially between Northern and Southern European countries. In Greece the Justice Administration doesn’t function effectively, so that there are grave challenges in securing property, for example by the means of the Copyright Protection. Finland shows steady decent scores in all categories and subcategories. Another trend is can be followed through comparison between former Soviet countries and Western European countries. In Latvia there are issues with the Judicial Independence and the Copyright Protection, leaving its score on a relatively low level. In Luxembourg the overall score and the scores for the sub-indixes are significantly high, especially in terms of fight against Corruption. The Indexes analyzed show that that there is a two level Europe. On one  level, there is a high level of protection and guarantee of property rights in the Northern and Western European countries, on the other – a low protection of property rights in the Southern and Eastern European Countries.

* Sven Sydow is currently an intern at the Austrian Economics Center

Notes:

[i] http://orf.at/stories/2277405/ last access: 23.11.2015 11:47] and

http://diepresse.com/home/wirtschaft/recht/4677467/Umfrage_Ueberregulierung-hemmt-das-Wachstum

[last access: 23.11.2015 11:31]

[ii] https://science.apa.at/rubrik/politik_und_wirtschaft/Immer_mehr_oesterreichische_Patente_werden_in_

China_angemeldet/SCI_20151009_SCI40111351025960334 [last access: 23.11.2015 11:52]

[iii] http://internationalpropertyrightsindex.org/countries?r=WE [last access: 18.11.2015 11:47] and

http://internationalpropertyrightsindex.org/countries?r=CEECA [last access: 18.11.2015 11:48]

[iv] http://internationalpropertyrightsindex.org/country?c=GREECE [last access: 18.11.2015 11:50] and

http://internationalpropertyrightsindex.org/country?c=FINLAND [last access: 18.11.2015 11:50]

[v] http://internationalpropertyrightsindex.org/country?c=LUXEMBOURG [last access: 18.11.2015 11:51]

http://internationalpropertyrightsindex.org/country?c=LATVIA [last access: 18.11.2015 11:52]