The Property Rights Alliance (PRA) recently released its International Property Index for 2010, a global index that evaluates property rights in a total of 125 countries. The annual publication is developed under the Hernando de Soto Fellowship and was created to demonstrate the importance of formal property rights in achieving sustainable economic growth. Hernando de Soto is a longtime partner of CIPE, and his work has been invaluable in providing the disenfranchised with access to property rights.
The Index ranks countries according to three criteria: Legal and Political Environment, Physical Property Rights, and Intellectual Property Rights. Reducing the size of the informal sector and securing property rights have long been cornerstones of CIPE’s mission, and this study illuminates countries’ strengths and weaknesses when it comes to property rights. CIPE has implemented a variety of programs related to formalizing informal property rights, including an ongoing project with de Soto’s Institute for Liberty and Democracy that works toward strengthening and formalizing property rights of the indigenous peoples living in the Peruvian Amazon.
In recent years, CIPE has worked on transitioning informal market activity to the formal economy in Peru, Venezuela, and Guatemala. Meaningful property rights that protect and provide business advantages, rather than just a tax burden, are a key incentive for that transition. The International Property Index ranks four LAC countries in the top fifty, demonstrating progress for some but also a continuing need for further development for others in the region. The Index identified that in the LAC region particularly the weakest area for property rights was related to its legal and political environment, receiving an average score of 4.4 out of 10.
In a detailed case study of Venezuela (#121 out of the 125 countries), included as part of the report, specifically defined areas needing strengthening including “open disregard of the existence of private property.., enactment of laws that violate constitutional guarantees concerning property takings…, and application of regulations violating the essential contents of property rights and economic freedom..,” all issues that also undermine the foundation of the country’s democracy. Although the case study described an absence of defined property rights in Venezuela, it also recognizes the work of NGOs such as CIPE’s partner, the Center for the Dissemination of Economic Knowledge (CEDICE), in educating citizens about the property rights and the informal sector.
CIPE partnered with CEDICE to conduct field research and to determine the underlying causes of the vast informal sector in the greater Caracas metropolitan area. CEDICE then presented policy solutions to municipal authorities to help address the key obstacles facing informal street vendors and forcing them to conduct business in the underground market sector. The recommendations were published in a book and in the policy brief series (in Spanish), entitled “Informal Economy in Venezuela.”
Published Date: July 02, 2010