Property Rights Index

III. Methodology

  1. Property Rights: The Essence of Liberty

  2. IPRI Structure

  3. Methodology

  4. IPRI 2017 Country Results

  5. IPRI-Population

  6. IPRI and Gender

  7. IPRI and Development

  8. IPRI Cluster Analysis

  9. Final Remarks

  10. References

  11. Appendix


III. Methodology

The IPRI’s 2017 scores and rankings are based on data obtained from official sources made publicly available by established international organizations (see Appendix I). This means that most data is provided in different styles and on different scales. Consequently, the data is rescaled in order to accurately compare among countries and within IPRI’s individual components and the overall score.

The overall grading scale of the IPRI ranges from [0 – 10], where 10 is the highest value for a property rights system and 0 is the lowest value (i.e. most negative) for a property rights system within a country. The same interpretative logic is applied to the three components and to the 10 items or indicators. While the average mechanisms applied assume equal importance for each component of the final IPRI score (and also of each item for each component), some weights could be applied to evaluate the relative importance of the different aspects of a property rights system of a country.

The IPRI for 2017 uses data from the 2010 – 2017 period. The 10 items are collected from different sources, which imply that they have different accessibility times for the most updated data available. The applied logic in the analysis has been to include the latest available data sets for the 2017 IPRI. Most of the items present a lag of 1 year (see Appendix I), so the time difference among data, should not affect our analysis. Almost all the items needed to be rescaled to the IPRI range.  The rescaling process was done as follow:

1.           For bounded data series with same direction:

2.           For unbounded data series with same direction:

3.           For bounded data series with inverse direction:

IPRI Calculations

After calculating the score of the IPRI and its components, countries were ranked according to their scores. With some frequency, a few countries can exhibit almost the same score and they will be placed in the same rank. This way, i.e., Country A could be ranked #1, while Country B and Country C #2, and Country X, Country Y and Country Z are #3. To minimize this situation and a diffusion bias, ranking calculations were made using IPRI scores with all their decimals, this way the final scores were differentiated, and such were the ranking positions.


III.1. Countries and Groups

The 2017 IPRI ranks a total of 127 countries. This year there are four countries that were part of the index last year but they are not included in this year’s index: Guyana, Haiti, Myanmar and Swaziland. While three were added: Brunei Darussalam, Democratic Republic of Congo, and Republic of Yemen.

The selection of countries was determined only by the availability of the required data. In order to keep the meaningfulness of the data and analysis, only country-year combinations respecting specific rules have been considered.

Since the 6th edition of the IPRI the rule of two-thirds was implemented signifying the least amount  of data required for each component to make it into the index. Or, more specifically, if a country does not have data available for at least 3 items in the LP component, 2 items in the PPR component, and 2 items in IPR component, it has to be excluded from the analysis.

All countries were grouped following different criteria (Appendix II):

  1. Geographical regions: Latin America and Caribbean, Western Europe, Central Eastern Europe and Central Asia, Middle East and North Africa, Africa, Asia and Oceania, and North America

  2. Income classification, according to the World Bank, July 2016 update: High income, Upper-Middle-Income, Lower-Middle-Income, and Low-Income.

  3. Regional and Development classification, according to the International Monetary Fund as of April, 2016: Advanced Economies; Commonwealth of Independent States; Emerging and Developing Asia; Emerging and Developing Europe; Latin America and the Caribbean; Middle East, North Africa, Afghanistan and Pakistan; and Sub-Saharan Africa.

  4. Economic and Regional Integration Agreements: Organization for Economic Co-operation and Development, European Union, Southern African Development Community, Economic Community of Western African States, Association of Southeast Asian Nations, Central American Parliament, Gulf Cooperation Council, Pacific Alliance, Southern Common Market, South Asian Association for Regional Cooperation, Central African Economic and Monetary Community, Central American Common Market, Commonwealth of Independent States, Arab Maghreb Union, Caribbean Community, Andean Community, European Free Trade Association, Intergovernmental Authority on Development, North American Free Trade Agreement, Organization of the Petroleum Exporting Countries, Economic Community of Central African States and Trans-Pacific Partnership.