Opinion IPRI and the retreat from reforms

IPRI is compiled by Property Rights Alliance and works through a network of organisations in several countries.

August 10, 2010 02:44 PM IST First published on: Aug 10, 2010 at 02:44 PM IST

There is something called International Property Rights Index (IPRI). It isn’t as widely known as many other similar cross-country indices floating around,one reason being it isn’t that old. It was started in 2007,and the fourth version (for 2010) has recently come out.

This fourth version covers 125 countries. IPRI is compiled by Property Rights Alliance and works through a network of organisations in several countries. For example,partners in India are Centre for Civil Society (CCS),Centre for Policy Research (CPR) and Liberty Institute (LI).

Contrary to what people sometimes think,IPRI isn’t about intellectual property alone. It covers physical property too and the core proposition is that private physical and intellectual property rights are positively correlated with economic development.

More specifically,IPRI has three heads of legal and political environment,physical property rights and intellectual property rights. Legal and political environment (LP) has the variables of judicial independence,rule of law,political stability and control of corruption. Physical property rights (PPR) has variables of protection of physical property rights,registering property and access to loans. IPR has variables like protection of intellectual property rights,patent protection and copyright piracy.

Given these variables,data have to be both subjective and objective. But IPRI doesn’t compile fresh data. Data come from standard sources like Global Competitiveness Index,World Bank’s Governance Matters,World Bank’s Doing Business Report and Ginarte-Park Index of Patent Rights. What is a little new is copyright piracy data from Business Software Alliance.

One then attaches weights and aggregates. For the record,India is ranked 53rd out of those 125 countries,wedged in between Poland and Latvia. Finland is at the top,and Bangladesh is at the bottom.

India’s low score and rank shouldn’t surprise us. What is interesting is something else. Since 2007 (when IPRI) started,India’s score has declined in each of the three sub-heads of LP,PPR,IPR and the overall IPRI score. To repeat,these are declines in scores,not ranks (which depend on performance of other countries). There is a value judgment in exercises like IPRI,since the premise is private market-based solutions are preferable to state intervention.

That’s what economic reforms are also about. Precise IPRI numbers don’t matter. Nor is this a trend that comes across only in IPRI. Other cross-country surveys also replicate this trend,so this is fairly robust. In the present case,since 2007,judged by this yardstick,India has retreated from reforms. Why does that not surprise us that much?