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Norway Tops Global Property Rights Protection Index

By Reuters
Tuesday, 6 Mar 2007 | 5:25 AM ET

Norway topped a global index of intellectual and physical property rights released on Tuesday while Bangladesh came last, highlighting that the weakest economies have the weakest property rights laws.

Norway and other West European economies including Denmark, Sweden and the Netherlands dominated the top 10 rankings of the inaugural index, which was compiled by the Washington D.C.-based Property Rights Alliance and released in Hong Kong.

"There is a correlation between property rights and gross domestic product and this is something governments should be concerned about if they want to create wealthy countries," said Andrew Work, executive director of Hong Kong think-tank The Lion Rock Institute, one of the survey's distributors.

The index, which is based on surveys on the perception of physical and intellectual property rights in 70 economies, is also sponsored by Peruvian economist Hernando de Soto, who has found property rights to be a key distinction in why some countries are poor and some rich.

In the index, the top 25% of economies had an average per capita gross domestic product of $32,994 or seven times that of the bottom 25% whose per capita GDP averaged $4,294.

Factors taken into account in calculating property rights protection included judicial independence, political stability, corruption and legal protection of physical and intellectual property rights and also included citizens' access to loans.

While Norway and its Scandinavian neighbours scored high marks on all factors, the United States scored less well on its legal and political environment and was ranked 14th in the index, behind Japan at 13th.

"In the United States there could be a perception that the government needs to clean up in the wake of Enron and other scandals," Work said.

African and Latin American countries as well as Russia dominated the bottom of the table.

China and India tied for 39th place. China was helped by the fact that the survey looked at women's ability to access financing and property inheritance. However Work said property rights in both countries were weak.

"They're both weak but in different ways," he said. "China is weak in piracy and counterfeiting whereas India is weak on patents for pharmaceuticals. I'd expect India to do better because now they do have a more research-based pharmaceutical industry and they are more willing to move to patents."

Li Kui Wai, associate professor of economics at the City University of Hong Kong, said property rights were fundamental for economic progress.

"If you want to enjoy the benefits of globalisation then domestic infrastructure such as property rights are more important than being an open economy that attracts lots of foreign investment and trade like China," Li said.

Japan, Singapore and Hong Kong were the only Asian economies ranked in the top 20 of the index, which will be released annually.

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