Property rights and the wealth of nations

The International Property Rights Index, compiled by the Property Rights Alliance (based in Washington DC) and 92 partner think-tanks around the world, contains some interesting stuff. Finland tops the index, followed by Norway, New Zealand, Luxembourg and Singapore. At the bottom is (you guessed it) Myanmar, Bangladesh, Angola, Haiti and Venezuela. Indeed, the figures suggest a very strong and significant correlation (0.822) between a robust property rights system and GDP per capita. Countries in the top quintile of property rights scores have an average per capita income some 24 times higher than those in the bottom quintile. There is a positive but weaker correlation between property rights and economic growth, and property rights and foreign investment.

Interesting too is the result that the countries with the greatest gender equality, in terms of access to property rights, are again the richest, with Finland, Norway, New Zealand, Luxembourg, Sweden, Japan, Switzerland, Canada and the Netherlands topping the ratings. The countries with least gender equality feature many of the poorest, namely Bangladesh, Myanmar, Yemen, Libya, Angola and Nigeria.

So do countries have better property rights because they are rich, or do they get rich because their have better property rights? The remarkable decline of countries that have tried various brands of communism might give us a clue.