Methodology

Explanatory Notes on Methodology:

The overall grading scale of the IPRI ranges from 0 to 10, where 10 is the highest value for a property rights system and 0 is the lowest value for a property rights system within a country. The same interpretative logic is applied to the three components and the items which form the components. While the average mechanisms applied assumes equal importance of each component for the final IPRI score (and also of each item for each component), the author acknowledges that weights could be applied in order to better capture relative importance of the different aspects of a property rights system of a country. Therefore, future IPRI reports are invited to further explore this issue.

The IPRI for 2013 focuses on the period from 2009 to 2013. Items are collected from different sources, which imply that they have different accessibility times for the most updated data available. The logic applied in the analysis has been to include the latest data available to the 2013 IPRI, and add accordingly any data from previous years. So, if an item was available only up until 2011 (because both the 2012 and 2013 were not made available yet from the data provider), we treat the 2011 as the most updated, therefore, as the 2013 data. Most of the items present a lag of 1 year, so this “item time harmonization procedure” should not affect our analysis.

The 10 items included in the IPRI have been collected from different sources. Almost all the items needed to be rescaled from 0 to 10.

 

The Countries:

The 2013 IPRI ranks a total of 131 countries from around the world. The selection of countries was solely determined by the constraint of available data. In order to increase the meaningfulness of the data and analysis, only country-year combinations respecting specific rules have considered; such as, 3 items for LP, 2 items for PPR, and 2 items for IPR. In other words, if a county in a specific year does not have data available for at least 3 items for LP, 2 items for PPR, and 2 items for IPR, it has been excluded from the analysis. The selected countries, 131 for the IPRI 2013, have been grouped in 7 regions: Latin America and Caribbean (LAC), Western Europe (WE), Central/Eastern Europe and Central Asia (CEECA), Middle East/North Africa (MENA), Africa (A), Asia and Oceania (AO), and North America (NA).

 

Limitations and Future Considerations:

The data used in the construction of the IPRI is collected from third-party sources (ex. World Bank, World Economic Forum), and not generated by the author. While this helps to reduce the amount of potential bias, it limits the ability of the author to reconstruct any missing data.

As in the past, this study remains constrained by the availability of intellectual property rights data, especially by the lack of data on trademarks. In 2009, the item, trademarks, was dropped from analysis because data was not up-to-date; this situation still persists. However, the author remains confident that in the future, reliable data will be available because of new developments in databases by authoritative sources. Additionally, the IPR data can significantly benefit from better measures of enforcement efforts in the area of intellectual property rights by national governments, private sector groups and non-profit organizations. Similarly, the PPR component could also be improved by including more ‘hard data’ on the security of property rights. These remain the areas with the most potential for further improvement of the data underlying the IPRI.

Finally, time-series aspects of the index continue to be used as the index enters its seventh year of publication. However, the nature of institutions is such that effects of their changes might not be felt in the outcomes of interest for many years. Additionally, lack of updated data on economic outcomes significantly interferes with the analysis. The author hopes that these constraints will be overcome in the future and that the theoretical relationship between property rights institutions and economic well-being can be tested empirically using more robust methods.

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