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Institutions, Property Rights and Growth

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  • Paul J. ZAK

    (Claremont Graduate University)

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    Abstract

    This paper presents a growth model in which property rights are insecure and costly to enforce. Losses of property provide the impetus to establish institutions which seek to enforce property rights. Institutions are shown to implement policies that enforce property rights. The model establishes that economies in which the institutional structure does not adequately protect property rights grow slowly, or not at ail, while countries with better property rights protection grow in accordance with the standard neoclassical model. Because income inequality is a primary incentive to violate another's property rights, the model also provides a positive theory of income redistribution. Empirical tests of the model's predictions demonstrates that government expenditures that enforce property rights raise per capita income growth.

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    Bibliographic Info

    Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (REL - Recherches Economiques de Louvain) with number 2002014.

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    Length: 20
    Date of creation: 01 Mar 2002
    Date of revision:
    Handle: RePEc:ctl:louvre:2002014

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    Related research

    Keywords: Institutions; Growth; Development; Property Rights;

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    References

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    23. Benhabib, Jess & Rustichini, Aldo, 1996. " Social Conflict and Growth," Journal of Economic Growth, Springer, Springer, vol. 1(1), pages 125-42, March.
    24. Bruno AMABLE & Régis BRETON & Xavier RAGOT, 2002. "Does the “New Economy” Change the Frontiers of the Large Corporation?," Discussion Papers (REL - Recherches Economiques de Louvain), Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) 2002029, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    25. Grossman, Herschel I & Kim, Minseong, 1995. "Swords or Plowshares? A Theory of the Security of Claims to Property," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 103(6), pages 1275-88, December.
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    Cited by:
    1. Ngendakuriyo, Fabien & Zaccour, Georges, 2013. "Fighting corruption: To precommit or not?," Economics Letters, Elsevier, Elsevier, vol. 120(2), pages 149-154.
    2. Gradstein, Mark, 2004. "Governance and growth," Journal of Development Economics, Elsevier, Elsevier, vol. 73(2), pages 505-518, April.
    3. Gradstein, Mark, 2003. "Governance and economic growth," Policy Research Working Paper Series 3098, The World Bank.
    4. Zak, Paul J. & Feng, Yi, 2003. "A dynamic theory of the transition to democracy," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 52(1), pages 1-25, September.

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