Iran’s Int’l Property Rights Index Gets Better in 2018

EghtesadOnline: The 2018 International Property Rights Index Report shows Iran's IPRI score has increased by 0.227 to 4.748.

News ID: ۷۸۳۸۰۴

26 August 2018

This takes the country's rank to 12th in the Middle East and North Africa region, and 91st in the world.

The overall grading of IPRI is 0-10, where 10 is the highest value for a property rights system and 0 is the lowest value.

The 2018 edition covers 97.52% of world GDP and 93.05% of world population, according to Financial Tribune.

The IPRI is the flagship publication of Washington-based organization, the Property Rights Alliance, a project of US taxpayer advocacy group Americans for Tax Reform. It announces the IPRI annually, ranking individual rights to own private property worldwide.

The index focuses on three main factors: Legal and Political environment, Physical Property Rights and Intellectual Property Rights.

According to PRA, property rights protections are a key indicator of a government's commitment to the values and principles of individual liberty. A rebuts system dedicated to the enforcement of property rights propels economies forward. Property rights are a linchpin for the prosperity of societies and their ability to address present and future challenges

The 2018 IPRI ranks 125 countries and is determined by the availability of sufficient data.

Finland led the 2018-IPRI with an overall score of 8.6924. New Zealand ranks second (8.6322), followed by Switzerland (8.6183), Norway (8.4504), Singapore (8.4049), Sweden (8.3970), Australia (8.3295), the Netherlands (8.3252), Luxembourg (8.2978) and Canada (8.2947).

1. Legal and Political Environment

The Legal and Political Environment component measures the ability of a nation to enforce a de jure system of property rights. It comprises four elements: the independence of its judicial system, the strength of the rule of law, the control of corruption and the stability of its political system.

> Judicial Independence

This item examines the judiciary’s freedom from political, individual or business groups’ influence. The independence of the judiciary is a central underpinning for the sound protection and sovereign support of the court system with respect to private property. The original data scale is 1-7, where 7 is the best score.

> Rule of Law

This element measures the extent to which agents have confidence and stand by the rules of their society.

Specifically, it measures the quality of contract enforcement, property rights, police and courts, as well as the likelihood of crime and violence. It combines several indicators, including fairness, honesty, enforcement, speed, affordability of the court system, protection of private property rights, and judicial and executive accountability. Rule of Law complements the Judicial Independence item. The original data scale is -2.5 to 2.5, where 2.5 is the best score.

> Political Stability

Political stability endorses incentives to obtain or extend ownership and/or management of properties. The higher the likelihood of government instability, the less likely people will be to obtain property and develop trust in the soundness of the rights attached. The original data scale is -2.5 to 2.5, where 2.5 is the best score.

> Control of Corruption

This item combines several indicators that measure the extent to which public power is exercised for private gain. This includes petty and grand forms of corruption, as well as the "capture" of the state by elites and particular interests.

As with other items in the LP component, corruption influences people’s confidence in the existence of sound implementation and enforcement of property rights.

Corruption reflects the degree of informality in the economy, which is a distracting factor to the expansion of respect for legal private property. The original data scale is -2.5 to 2.5, where 2.5 is the best score.

The 2018 report shows Iran’s LP sub-index increased by 0.240 to 3.848 with scores of 4.379 in Judicial Independence, 3.575 in Rule of Law, 3.871 in Political Stability and 3.567 in Control of Corruption.

2. Physical Property Rights

A strong property rights regime promotes confidence in its people through its effectiveness to protect private property rights. It also provides for integrated transactions related to the registry of property and allows access to the required credit to convert property into capital. For these reasons, the following items are used to measure private Physical Property Rights protection.

> Protection of Physical Property Rights

The Protection of Physical Property Rights relates directly to the strength of a country’s property rights system based on experts’ views of the quality of the judicial protection of private property, including financial assets. Additionally, it incorporates experts’ opinions on the precision of the legal definition of property rights. The original data scale is 1-7, where 7 is the best score.

> Registering Property

This item reflects businesses’ point of view on the complexity of registering property in terms of the number of days and required procedures. It records the full sequence of procedures needed to transfer a property from seller to buyer when a business purchases land or a building.

This critical information shows that the more difficult property registration is, the more likely it is that assets stay in the informal sector. This limits development of the broader public understanding and support for a strong, legal and sound property rights system. Moreover, registration barriers also discourage assets’ movement from lower to higher prized uses. The original data scale is 1-?, where 1 is the best score.

> Ease of Access to Loans

Access to bank loans without collateral serves as a proxy of the financial sector’s development in a country. Financial institutions and a strong property rights system play a crucial complementary role to bring economic assets into the formal economy. Therefore, credit facilities have always been an important channel in alleviating poverty. The original data scale is 1-7, where 7 is the best score.

Iran’s PPR sub-index increased by 0.017 to 5.787 with scores of 4.744 in perception of Property Rights Protection, 9.566 in Registering Property, and 3.051 in Ease of Access to Loans.

3. Intellectual Property Rights

The Intellectual Property Rights component evaluates the protection of what has become the most valuable sector in advanced economies. In addition to an opinion-based measure, it assesses protection of two major forms of intellectual property rights (patents and copyrights) from a de jure and a de facto perspective.

> Protection of Intellectual Property Rights

Capturing a nation’s protection of intellectual property is a crucial element of IPRI. The original data scale is 1-7, where 7 is the best score.

> Patent Protection

This item reflects the strength of a country’s patent laws based on five extensive criteria: coverage of subject matter, membership in international treaties, restrictions on patent rights, enforcement mechanisms and duration of protection.

> Copyright Piracy

The level of piracy in the Intellectual Property sector is an important indicator of the effectiveness of Intellectual Property Rights enforcement in a country.

Iran’s IPR sub-index increased by 0.425 to 4.610 with scores of 4.088 in perception of Intellectual Property Protection and 5.133 in Patent Protection, but data was not available to measure Copyright Protection.