BWorld 211, Intellectual property, innovation, and prosperity

* This is my column in BusinessWorld last May 10, 2018.

The BusinessWorld Economic Forum 2018 is fast approaching this coming May 18 and it has a timely theme, “Disruptor or Disrupted? The Philippines at the Crossroads.” Focus is on the challenges, risks and potentials of artificial intelligence (AI) and other technological advances.

Endless trial and error, research and development, intangible and intellectual creations, are at the heart of innovation and economic disruptions. The role of property rights protection in general and intellectual property rights (IPR) in particular cannot be overlooked.

Here are some numbers showing the degree of competition among countries and economies in encouraging and protecting innovation and IPR as shown by three data sources. These are the

(1) World Intellectual Property Organization (WIPO), INSEAD, and Cornel SC Johnson College of Business, “The Global Innovation Index 2017” (GII); (2) Property Rights Alliance (PRA) — International Property Rights Index 2017 (IPRI); and the (3) US Chamber of Commerce (USCC) — Global Innovation Policy Center (GIPC), International IP Index (IIPI) 2018.

WIPO’s methodology is interesting.

The overall GII score is computed by getting the simple average of the Input and Output Sub-Index scores. The Innovation Input Sub-Index is comprised of five pillars: (1) Institutions, (2) Human capital and research, (3) Infrastructure, (4) Market sophistication, and (5) Business sophistication. The Innovation Output Sub-Index is composed of two pillars: (6) Knowledge and technology outputs and (7) Creative outputs.

Each pillar is divided into three sub-pillars and each sub-pillar is composed of individual indicators, for a total of 81 indicators. Cool.

Data on GDP per capita income at purchasing power parity (PPP) $ values are from the International Monetary Fund (IMF), World Economic Outlook database, April 2018. The numbers in parenthesis of each report (WIPO-GII, IPRI, IIPI) represent the total number of countries included in their respective reports (see table).

  

These numbers show the following:

One, countries with high global rank and scores in innovation and IPR index are also those with high per capita income. Conversely, countries with low global rank in innovation also have low per capita income.

Two, the Philippines in particular exhibits this low ranking. Placing only 73rd out of 127 countries in WIPO-GII 2017 report, 64th out of 127 countries in PRA-IPRI 2017 report, and 38th out of 50 countries in the GIPC-IIPI 2018 report. Our GDP per capita income of only $8,300 at PPP values is low, and even lower if nominal GDP prices are used, less than $3,000.

Three, many East Asian economies are rising in ranking, landing in the top 25% in global ranks.

To further reiterate the importance of intellectual property (IP) and innovation, 70 independent and free market-oriented think tanks and institutes worldwide sent an open letter to WIPO Director General Dr. Francis Gurry, during the 2018 World IP Day last week, April 26.

The letter was spearheaded by the PRA in the US and Minimal Government Thinkers is among the 70 co-signatories. The letter was also sent to UN Secretary-General Antonio Guterres, and Director-General of the World Health Organization (WHO) Tedros Adhanom Ghebreyesus.

The letter highlighted some important facts, among them:

* In 2016, a record 3.1 million new patents were filed worldwide. These patents protected groundbreaking technological processes, helped cure devastating diseases, and modernized everyday conveniences.

* Copying is not the same as inventing and enforcement of IP rights helps prevent counterfeits that undermine innovation and help finance criminal organizations. This shadow economy of counterfeits is responsible for nearly 2.5% of global imports, amounting to nearly $461 billion.

* 10% of global pharmaceutical trade is thought to be counterfeit. These “medicines” have serious health consequences, including death. New medicines require research, trials, $2.8 billion, and up to 12 years. IP Rights incentivize commitment and collaboration.

* Removing trademarks through plain packaging has costly economic, health, and security consequences. $300 billion is the implied loss to the beverage industry if such packaging is applied to alcohol and sugary drinks.

Another global group, the Biotechnology Innovation Organization (BIO) is also promoting innovation in biotechnology of innovative health care, agricultural, industrial, and environmental products.

Governments, national and multilaterals like the UN and WHO, should help encourage and respect IPR and innovation. Some cases however show that they do otherwise.

For instance, the 2016 UN High-Level Panel on Access to Medicines, their report has portrayed patents and IP as harmful to global development and human rights. Backward thinking.

The enemy of public health and human rights are counterfeits and substandards — medicine, food, and drinks — and the criminal organizations that manufacture and sell these products.

Bienvenido S. Oplas, Jr. is President of Minimal Government Thinkers, a member-institute of Economic Freedom Network (EFN) Asia.

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See also:

BWorld 206, Intellectual property rights in East Asia, May 09, 2018

BWorld 208, Consumer choice in electricity supply and prices, May 11, 2018 

BWorld 209, Is the PCC a facilitator or a hindrance to business competition? May 15, 2018 

BWorld 210, Electricity competition, EPIRA, and WESM, May 16, 2018

BWorld 206, Intellectual property rights in East Asia

* This is my column in BusinessWorld last April 19, 2018.

The degree of wealth and economic size of East Asian economies generally correlate with their degree of private property rights protection, both physical and non-physical or intellectual property. While protection of physical properties like houses, cars, and land are easier to see and measure, the protection of intellectual property rights (IPR) like patents, copyrights, trademarks, and trade secrets are not so tangible.

IPRs are important because they represent the “heart and soul” of private enterprises and the goods and services that they produce.

For instance, people differentiate and choose shoes made by companies as represented by their logos such as a big check, three striped leaves, or letter F. These same people also choose products from food companies with logos of a double arch, a happy insect, or a smiling young female.

Here are some numbers showing the degree of IPR protection of selected East Asian economies. (Data and report sources are (1) Property Rights Alliance (PRA)- International Property Rights Index (IPRI) 2017 Report, (2) US Chamber of Commerce (USCC)- Global Innovation Policy Center (GIPC), International IP Index (IIPI) 2018, and (3) World Economic Forum (WEF), Global Competitiveness Report (GCR) 2017-2018. The numbers in parenthesis beside each report represent the number of countries or economies covered. The WEF’s GCR is composed of 12 pillars and pillar #1 is about Institutions; among the sub-pillars there is IPR protection).

These numbers show that East Asian tiger economies also rank high in IPR protection. Conversely, emerging economies aspiring to join the club of tiger and developed countries tend to have medium to low ranking in IPR protection. The exception is Brunei, a developed economy in terms of per capita income (thanks to its high gas exports and small population) but it is low in IPR protection.

The issue of IPR protection in the region was tackled by a symposium early this week entitled “Intellectual Property Rights in the ASEAN Economic Community: Challenges and Potentials” at Intercontinental Kuala Lumpur, Malaysia. The event was organized by the Institute for Democracy and Economic Affairs (IDEAS), Malaysia’s first and most dynamic free market think tank.

There are moves to abolish the trademark, corporate logos and branding of products deemed “unhealthy” in many countries.

For instance, plain packaging of tobacco products has been legislated in Australia and France, and is currently considered to be legislated in Singapore too. Such trademark busting policies are also considered as extended to other “unhealthy” products like alcohol, sugary food like chocolates, confectionery and candies.

IDEAS commissioned a study that was presented in the symposium entitled “Challenges in Improving Intellectual Property Rights in ASEAN: Case study of Singapore, Malaysia, Indonesia, Thailand and Philippines” by Adidarmawan, S.H. and Marolita Setiati.

In the paper, the two authors noted that:

“Trademark promotes freedom of choice and enable consumers to make quick, confident and safe purchasing decisions. Standardizing… packaging for tobacco products that would restrict the use of brands, trademarks and trade… concern is if brand marks are eroded, then consumers are not able to differentiate between inferior products and those with a reputation for reliability that may create an environment in which companies may end up competing on price instead of quality. In addition, plain packaging is easier for counterfeiters to copy and could result in an increase in inferior — and more dangerous — imitations. The counterfeiters will have an easier time duping the consumer into buying products that are sub-standard. Brand restriction sets an unfortunate precedent, opening the door for IP rights to be weakened in other industries.”

A BusinessWorld report early this week entitled “Excise tax increase triggers widespread cigarette smuggling” also underscores these concerns.

High taxes, rising regulations and plain packaging have similar effects — they make the consumption of legal and branded products like tobacco and alcohol more restricted and more costly, which open up more space and markets for illicit, illegal, smuggled, and cheaper products. This results in more smoking, more drinking, more consumption of the restricted products.

Governments should focus on protecting private property rights, both physical and intellectual. Weakening such property rights will also lead to a weakened state and strengthen the powers of smugglers and criminal syndicates who do not pay taxes and do not respect brands and intellectual property.

Bienvenido S. Oplas, Jr. is President of Minimal Government Thinkers, a member-institute of Economic Freedom Network (EFN) Asia.

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See also:
BWorld 203, TRAIN, inflation and PPP, April 10, 2018
BWorld 204, Mining attractiveness index and the Philippines, April 30, 2018 

BWorld 205, Energy mix and wishful thinking, April 30, 2018

IPR and Innovation 39, Recent IP developments in CN, TW, KR, ID

Reposting these news stories collated by PRA, enjoy.
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China launches campaign to protect IPRs of foreign companies

China.org.cn, September 19, 2017

The Chinese government has begun a campaign to protect the intellectual property rights (IPR) of foreign companies.

The campaign will focus on malicious trademark registration and imitation of foreign brands, the Ministry of Commerce said Monday, citing a joint action plan by 12 government departments.

From September to December, the campaign will also target infringement of online IPRs, patent rights and plant variety rights, as well as industrial espionage, according to the plan.

IP in the Cloud: the China Perspective

Lexology, October 20, 2017

China is in the middle of a rapid shift towards cloud technologies. Execution of the 13th Five Year Plan will deliver substantial investment into cloud computing and the sector is undergoing unprecedented growth. Meanwhile, organisations operating in this digital economy face an increasingly complex intellectual property (IP) environment, as China becomes a global IP center and scales up IP protection, enforcement and penalties for infringement. Indeed, the number of cloud-related IP lawsuits in China grew 158% between 2011 and 2016. Against this backdrop, organisations face an important question: how can they take advantage of the enormous opportunities presented by the cloud in a way that manages this complex IP landscape? In this post, Matt Pollins and Nick Beckett from CMS look at the practical steps organisations can take to protect themselves and succeed in the cloud. 

Taiwan approves major amendment to protect trademarks at the border

World Trademark Review, September 26, 2017

A major amendment in Taiwan to the regulations governing customs border measures will play a key part in protecting trademarks. The measures allow the owner of a trademark registered in Taiwan to file an application with Customs to have the trademark recorded on its database enabling Customs to seize counterfeits when it inspects imported or exported goods ex officio. The legal basis for this mechanism is rooted in the Regulations Governing Customs Measures in Protecting the Rights and Interests of Trademark, which is enacted pursuant to Paragraph 2 of Article 78 of the Trademark Act.

S.Korea urges DPRK not to violate property rights in closed inter-Korean factory complex

XinhuaNet, October 10, 2017

South Korea's unification ministry on Tuesday urged the Democratic People's Republic of Korea (DPRK) not to violate property rights owned by South Korean companies which had operated factories in the currently closed inter-Korean industrial complex.

US presses India on IP protection, market access and trade barriers

The Economic Times, October 27, 2017

Seeking to achieve a "more balanced" trade relationship, the Trump administration has pressed India on key issues like market access, lifting of trade barriers and intellectual property protection. During the first US-India bilateral Trade Policy Forum (TPF) under the Trump administration which was attended by US Trade Representative Robert Lighthizer and Union Minister of Commerce and Industry Suresh Prabhu, India strongly differed with the American position on many of the contentious issues.

India Taking Steps to Strengthen Intellectual Property Rights

PRA

During a meeting in New Delhi last week, Indian Commerce & Industry Minister Suresh Prabhu announced how "extremely important" it is for India to protect intellectual property rights. Minister Prabhu noted that the Indian economy has undergone robust changes during recent decades and is now a leader in innovation and developing technologies.

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See also:

IPR and Innovation 36, Plain packaging from tobacco and soon to soft drinks, alcohol, ice cream products, May 31, 2017 

IPR and innovation 37, US-China dispute on IP, September 17, 2017

IPR and Innovation 38, Recent IP development in some ASEAN countries, October 24, 2017

IPR and Innovation 35, Letter to WIPO on World IP Day

On April 28, 2017, the World Intellectual Property Day was celebrated. The Property Rights Alliance (PRA), publisher of the annual International Property Rights Index (IPRI), sent a letter last April 25 to the head of WIPO, below. MGT is one of four ASEAN-based free market think tanks that signed the letter.

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Celebrating the 2017 #WorldIPDay

Open Letter To

WIPO DirectorGeneral Dr. Francis Gurry

We the undersigned are proud to celebrate World IP day with the World Intellectual Property Organization (WIPO). Intellectual property (IP) rights play a crucial role in growing economies, driving innovation, and saving lives. Robust IP systems provide the greatest incentives for innovators to create the next generation of goods and services, artists to produce original works, and entrepreneurs to enter the marketplace. They also allow for the sharing of knowledge and technological advancement. Invention comes out of the shadows with good intellectual property protections.

IP Rights Grow the Economy

IP-intensive industries are the cornerstone of modern economies. Between the U.S. and E.U., IP-intensive industries employed between 30%-38% of their workforces—more than 127 million jobs. As a matter of fact, these industries are responsible for generating nearly 40% of the combined US & EU gross domestic products.

IP-intensive industries in these economies paid workers 46% higher wages than those employed in comparable jobs in non-IP-intensive industries. Similarly, per capita income in countries with robust property right is 21 times more than per-capita income in countries with weak protections.

IP Rights Drive Innovation

Human ingenuity is boundless, and IP rights create an environment where human creativity can be unleashed. In 2015, a record 2.9 million new patents were filed worldwide—ranging from groundbreaking technological processes to cures of catastrophic disease to modernizations of everyday conveniences.

To thrive, innovation must be protected. Enforcement of IP rights prevent production of counterfeits that undermine economic growth and finance criminal organizations. This underground economy is responsible for nearly 2.5% of global imports, threatening iconic retail brands and next-generation medicines alike. Copying is not the same as inventing.

IP Enhances Lives

Each patent offers an innovative approach to solving a human problem. Around the world 1.2 million people die in traffic accidents, and commuters waste years of their lives on the road. Now, over 33 companies around the world are investing billions of dollars, hiring thousands of researchers and

engineers, and inventing new driverless car technologies aimed to reduce traffic deaths and save time, a truly non-renewable resource.

However, the intellectual property that delivers these benefits and many others has never been more at risk. Even within the United Nations system, initiatives such as the High-Level Panel on access to medicines threaten to undermine the very protections that are so necessary to solve today's global challenges. WIPO must play a more active role in informing international debates.

Therefore, the undersigned call on WIPO to 1) review the ways that IP enhances economic development and access to new products; 2) proactively work with countries to stabilize, grow, and enhance their IP regimes and protections; 3) support IP as a property right and a right to enhancing human growth and development, and oppose adoption of policy to the contrary such as the UN High-Level Panel report. 

World IP Day is an opportunity to celebrate that which is uniquely human: constant innovation, reinvention, and curiosity. Intellectual Property fuels the economy, drives innovation, and saves lives. We look forward to working with WIPO to advance this understanding of intellectual property rights,

and to produce complimentary efforts aimed at accelerating the adoption of robust IP protections across the world that make intangible futures tangible.

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See also:

IPR and Innovation 32, On TPP, medicines patent and tobacco trademark, February 29, 2016 

IPR and Innovation 33, More on the panel on property rights, ALF 2016, March 09, 2016 

IPR and Innovation 34, When 95% of WHO's EML are off-patent, May 08, 2016

BWorld 26, IPRI 2015 in APEC economies, November 19, 2015 

BWorld 45, Asia Liberty Forum and property rights, February 29, 2016BWorld 81, Property rights are human rights, September 30, 2016.

Property Rghts 3: IPRI 2011 Report

Security of property rights is also security of individual freedom. Private property is private property. It can never be collective or government property. Otherwise, our car or cell phone is never our car or cell phone. Other guys can also say that it is also their own car or cell phone and they can get or confiscate such property from us. And we shall have zero peace and order in society.

It is good therefore, that the Property Rights Alliance (PRA) in the US has consistently sponsored the International Property Rights Index (IPRI) annual reports.

The overall IPRI score is derived from 3 main factors and their sub-factors, as indicated here. The sources of data were plenty and countries or economies are given a particular score depending on how respectful they are of each of the sub-factors given.

Every year, the number of countries covered by the IPRI Reports keeps increasing. This is a result of more reliable and more comparable data getting more available.

The result of IPRI 2009 Report, I wrote in Property rights and lefts (Part 1) last March 02, 2009. Out of the 115 countries covered by the report, the Philippines scored an overall index of 4.5, making it rank no. 74 (74/115) or belonging to the 4th quintile. What pulled down the Philippines' overall ranking then was its very low score in Legal and Political Environment (LP). I made the following concluding observation,

It is not healthy therefore, for an economy to embrace left-leaning policies that attempt to disrespect individual talents and performance, and forcibly collectivize things. Property rights is not a result of positive accidents that allowed the rights owner/s to own and control something without hard or meaningful work. Neither is it a privilege that was bestowed by the gods of the earth to their current right owners. Leftism cannot guarantee the respect and expansion of private property rights.

The IPRI 2010 Report was released in February last year. I wrote about it in Part 2 last February 27, 2010. Out of the 125 countries covered in last year's report, the Philippines did not show any improvement in score, still the same at overall index of 4.5, making it rank no. 80 (80/125) and hence, still belonged to the 4th quintile.

I concluded that article with the following statements:

For sure, big corruption and plunder scandals in government, plus policy reversals last year like strong attempts to re-regulate the petroleum industry and actual drug price control, contributed to the low belief by entrepreneurs and the citizens of the government’s ability to really promulgate the rule of law. Populism and leftism, the synonym concepts of socialism, will push any country towards economic underdevelopment. Private property is not public or government property. Private enterprises’ pricing should not be tinkered as government pricing.

This year's IPRI 2011 Report was released last week. It was written by Kyle Jackson, a PhD Economics student at George Mason University (GMU). Kyle actually invited me to contribute a short discussion on property rights and the real property tax (RPT) imposed by local governments in the Philippines. It was a big mistake on my part that I did not send him a discussion paper about the subject. But nonetheless, I am happy that Kyle was able to pull a comprehensive research work in this year's Report.

Four more countries were added to those covered in the 2010 Report, so that a total of 129 countries are covered this year. And once again, the strong link between economic development and property rights protection has been re-established.

Kelsey Zahourek, the indefatigable Executive Director of PRA, beautifully summarized the importance of this annual exercise:

... the protection of both physical and intellectual property is equally important in nature. Individual freedom, economic expansion and job creation depend on securing property rights. Patents, trademarks and copyrights provide inventors and great thinkers with the ability to be rightly rewarded for their innovations. Likewise, land rights provide empowerment through ownership, allowing citizens to utilize and prosper from their investment. Economic growth only occurs when property, in all forms, is respected and protected.

For the 3rd year in a row since the 2009 Report, our think tank, Minimal Government Thinkers has remained as one of the many free market think tanks from around the world that co-sponsored the publication and dissemination of the IPRI Report. We are also the only Philippine-based think tank among this prestigious list, about 67 independent think tanks from many countries.

Ok, so how did the Philippines and other East and South Asian countries fared and ranked with the rest in protecting private property rights?

03. Singapore
13. Hong Kong
16. Japan
23. Taiwan
38. S. Korea
44. Malaysia
54. Brunei
55. India
60. China
64. Thailand
77. Indonesia
77. Sri Lanka
81. Vietnam
87. Philippines
100. Nepal
113. Pakistan
125. Bangladesh

It is definitely disgusting to see your country slipping from an already low rank in last year's Report to an even lower rank in this year's Report. What happened?

The Philippines (87/129, still in the 4th quintile) government -- then under former President Gloria Arroyo as the data used were for 2008-2010 to allow for global comparison across many countries -- has become more confiscatory? Or more private individuals, groups or corporations have become more confiscatory while the Philippine government was just watching? Or the other countries that ranked lower than the Philippines last year simply improved significantly this year, jumping us overhead while many Filipinos were busy with the elections and all the drama and political stunts associated with the elections?

Whatever is the reason, unless we Filipinos will fully understand and respect private property rights, physical or intellectual property, more countries currently in the cellar will slowly overtake us in this important global ranking. Vietnam and Sri Lanka already overtook us.
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See also:
Property Rights 1: IPRI 2009 Report, March 02, 2009
Property Rights 2: IPRI 2010 Report, February 27, 2010

Property Rights 2: IPRI 2010 Report

Property rights means freedom. When someone says “I own this computer, this car and this house”, that person means he/she has exclusive right what to do with those properties. Whether to keep using them, or sell them and get a new one, or lend them to friends and relatives, or simply give them away for free to someone else. There is no external group or persons who can dictate and coerce that person what to do with those properties.

Now, remove that property right from that person and he/she will have zero peace of mind. Why? Because other people can also open up and use his car and say, “this car is mine too” and other people can enter his house and say, “this house is ours too, we are homeless and the government gave us some protection from bitter cold outside.”

Same month last year, I wrote an article, Property rights and lefts. It was about the result of the International Property Rights Index (IPRI) 2009 Report covering 115 countries. And the result of the study showed that the Philippines ranked 74th or it belonged to the bottom 40 percent of laggard countries that do not know how to properly protect their citizens' right to private property. I concluded that article with these words,

“It is not healthy therefore, for an economy to embrace left-leaning policies that attempt to disrespect individual talents and performance, and forcibly collectivize things.”

This week, IPRI 2010 Report was released by its main sponsor, the Property Rights Alliance (PRA) in the US. It is authored by Ms. Victoria Strokova, a young and dynamic intellectual from Russia who studied in the US. This time, there were 125 countries covered and the Report was co-sponsored by 63 think tanks from 40+ countries that are free market-oriented and strong believers of private property rights protection. Our very own Minimal Government Thinkers, Inc. is one of them and the only Philippine-based think tank that partnered with IPRI.

The IPRI Report measures three main categories. One, the legal and political environment (LP), composed of judicial independence, rule of law, political stability and control of corruption. Two, physical property rights (PPR), composed of protection of PPR, registering property and access to loans. Three, Intellectual property rights (IPR), composed of protection of IPR, patent protection and copyright piracy.

LP is important. When there is no rule of law and the government (from the Executive to Legislative and Judiciary) is corrupt, some politicians and bureaucrats can produce or allow the production, of fake land titles and they or their friends can engineer land grabbing of someone else’s property. PPR and IPR are equally important. When someone can say, “the huge cost of your scientific research and invention is your and yours alone, also the losses from your unsuccessful work. But your successful invention is also MY invention,” and government will tolerate it, then innovators will be discouraged from undertaking expensive and highly risky research and innovative work. And society will be stuck with old and outdated technologies and inventions, affecting productivity while human demands and population keep rising.

There is a scoring system employed in producing the composite IPRI, 1 the lowest (meaning almost zero protection of property rights) and 10 the highest.

The more important question now: how did the Philippines and other Asian countries fare compared to other countries around the world?

Column 1 is rank, column 2 is country, column 3 is IPRI score

8. Singapore, 8.2
18. Japan, 7.6
19. Hong Kong, 7.5
24. S. Korea, 6.8
Taiwan, 6.8
41. Malaysia, 6.1
53. India, 5.5
59. Thailand, 5.2
64. China, 5.1
80. Philippines, 4.5
Vietnam, 4.5
88. Brunei, 4.3
97. Indonesia, 4.1
104. Pakistan, 3.9

Again, the Philippines belonged to the bottom 40 percent of the 125 countries covered by the study, 80th out of 125 countries. What pulled down the country’s overall score and ranking, is its low score in the legal and political environment (LP), only 3.5.

For sure, big corruption and plunder scandals in government, plus policy reversals last year like strong attempts to re-regulate the petroleum industry and actual drug price control, contributed to the low belief by entrepreneurs and the citizens of the government’s ability to really promulgate the rule of law.

Populism and leftism, the synonym concepts of socialism, will push any country towards economic underdevelopment. Private property is not public or government property. Private enterprises’ pricing should not be tinkered as government pricing.
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See also:
Rule of Law 1: Entrepreneurship and Government Permits, September 16, 2008
Property Rights 1: IPRI 2009 Report, March 02, 2009

Property Rights 1: IPRI 2009 Report

(Note: this is my article for http://thelobbyist.biz this week with original title, "Property Rights and Lefts")

The ability to own or control, to keep or exchange, to sell or give away, a particular product or service, is one major indicator of how free an individual is.

For instance, a person owns a car but he believes or suspects that his car can also be claimed as a private property by other people, especially the bully and high-ranking government officials. The result is that he will have no peace of mind, always on his toes that his car can be taken or confiscated by other people any day and anytime. So he seldom uses his car, or he may have to hire a private security guard to help him guard his car. Lack of peace of mind means lack of energy to work productively and earn higher, while hiring a private security guard would mean higher monthly expenses and hence, lower disposable income and lower savings for the family.

Thus, societies that have well-defined private property rights and where the rule of law is properly and strictly observed, tend to have more economic stability.

Consumers and producers, workers and entrepreneurs, have peace of mind knowing that whatever contract they will enter with other people within or outside the country will be honored and respected -- that whatever commodity or service they will buy or receive as grants from other people, will be protected as their own private property, and no other people can claim ownership or control of those commodities and services.

This philosophy and sentiment is captured by a Report released this week entitled International Property Rights Index (IPRI), 2009 Report. This study is done and commissioned annually by the Property Rights Alliance (PRA) starting in 2007.

The 2009 IPRI Report compared the protections of physical and intellectual property to economic stability in 115 countries representing 96% of the world’s GDP. The Report is a composite ranking of three comprehensive areas of property rights: Legal and Political Environment (LP), Physical Property Rights (PPR), and Intellectual Property Rights (IPR).

Among the general findings of the Report are the following:

a. Countries that protect the physical and intellectual property of their people enjoy nearly nine times higher GDP per capita than countries ranking lowest in property rights protections.

b. Of the 115 countries included, the top quartile averaged $39,991 in GDP per capita while the average in the bottom 20% was only $4,341 per capita. The second, third and fourth quartiles averaged $23,982, $11,748, and $4,891 respectively. The nearly linear data trend shows that countries placing a high priority on property rights see increased economic security.

c. The result of scoring and ranking of each country and city, especially for Asian countries, is shown in this table below:

Table 1. Overall IPRI score and ranking, 2008

Rank Country Score

1 Finland 8.7
2 Netherlands 8.5
Denmark 8.5
4 New Zealand 8.3
Sweden 8.3
Germany 8.3
Norway 8.3
8 Switzerland 8.2
Australia 8.2
10 Austria 8.1
Iceland 8.1
Singapore 8.1

Rank Country Score

17 Japan 7.6
19 Hong Kong 7.3
24 S. Korea 6.8
29 Taiwan 6.5
36 Malaysia 6.2
46 India 5.6
51 Thailand 5.4
68 China 4.7
71 Sri Lanka 4.6
74 Philippines 4.5
77 Vietnam 4.4
87 Indonesia 4.1

The Philippines had a respectable score in PPR (5.5) but was pulled down by a low score in LP (3.3), so that based on LP score, the Philippines ranked 95th out of 115 countries!

It is not healthy therefore, for an economy to embrace left-leaning policies that attempt to disrespect individual talents and performance, and forcibly collectivize things.

Property rights is not a result of positive accidents that allowed the rights owner/s to own and control something without hard or meaningful work. Neither is it a privilege that was bestowed by the gods of the earth to their current right owners. Leftism cannot guarantee the respect and expansion of private property rights.
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See also: Rule of Law 1: Entrepreneurship and Government Permits, September 16, 2008