Is There a Relationship Between Economic Freedom and Intellectual Property Rights?

The Global Intellectual Property Center (GIPC) scores the intellectual property environment (IP) in 25 sampled countries ranging from high-income countries to emerging markets, as well as some relatively low-income countries. The Economic Freedom World Index (EFW), on the other hand, reflects the extent to which 152 countries and territories around the world are supportive of economic freedom. As shown in the report, high-income economies generally have a better intellectual property environment than lower-income economies. Most top-performers shown in the GIPC index report, such as America, UK, Australia, and the like, are in the top 20 of the ranking of the Economic Freedom index, except that France is 40th and Japan is 33rd. By the same token, countries with a lower ranking on the GIPC index have more controlled economies than those high-ranking countries. [See the table below.]

Let us take the five BRICS (Brazil, Russia, India, China, and South Africa) for instance. All BRICS economies are lower than the 50 percentile in the GIPC Index ranking and they all rank lower than 100th in the Economic Freedom World index ranking. Statistical analysis shows that a country’s EFW score has a significantly positive correlation with its score on the intellectual property index.

Although we basically prove that better performance in economic freedom predicts a better IP environment, we have to notice some exceptions. Some countries with high economic freedom scores do not have an equivalently good IP environment. For example:

  • The EFW ranking of Chile is 11th among 152 sampled countries, while its GIPC ranking is just over the 50th percentile.
  • The EFW ranking of United Arab Emirates is 5th, behind Hong Kong, Singapore, New Zealand, and Switzerland, while its GIPC rank is 15th, which is definitely under the 50th percentile.
  • The EFW ranking of France is 40th among 152 sampled countries, while its GIPC ranks 3rd, which is just behind the U.S. and UK.

Qualitative observations may provide a deeper perspective in comparison to quantitative analysis. (Click on link below to view table.)

EFW index and IP index

 

 

Comments (3)

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  1. Dickson says:

    But we still can see a great gap between developed countries and emerging economies.

  2. Joe Barnett says:

    As economies mature and invest more in R&D, produce more cultural goods for export, and consume more, intellectual property becomes more important to economic output and the living standards of people in that country.

  3. PJ says:

    Very interesting! Is IP taken into account in the economic freedom index?

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