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Property Rights and Financial Development: The Legacy of Japanese Colonial Institutions

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  • Dongwoo Yoo
  • Richard H. Steckel

Abstract

Several studies link modern economic performance to institutions transplanted by European colonizers and here we extend this line of research to Asia. Japan imposed its system of well-defined property rights in land on some of its Asian colonies, including Korea, Taiwan and Palau. In 1939 Japan began to survey and register private land in its island colonies, an effort that was completed in Palau but interrupted elsewhere by World War II. Within Micronesia robust economic development followed only in Palau where individual property rights were well defined. Second, we show that well-defined property rights in Korea and Taiwan secured land taxation and enabled farmers to obtain bank loans for capital improvements, principally irrigation systems. Our analytical model predicts that high costs of creating an ownership updating system and a citizen identity system discourage a short-sighted government from implementing these crucial components, the absence of which gradually makes land registration obsolete. Third, considering all of Japan’s colonies, we use the presence or absence of a land survey as an instrument to identify the causal impact of new institutions. Our estimates show that property-defining institutions were important for economic development, results that are confirmed when using a similar approach with British Colonies in Asia.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16551.

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Date of creation: Nov 2010
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Handle: RePEc:nbr:nberwo:16551

Note: DAE LE
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  1. Abhijit Banerjee & Lakshmi Iyer, 2005. "History, Institutions, and Economic Performance: The Legacy of Colonial Land Tenure Systems in India," American Economic Review, American Economic Association, vol. 95(4), pages 1190-1213, September.
  2. Stock, James H & Wright, Jonathan H & Yogo, Motohiro, 2002. "A Survey of Weak Instruments and Weak Identification in Generalized Method of Moments," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(4), pages 518-29, October.
  3. Nathan Nunn, 2007. "The Long-Term Effects of Africa's Slave Trades," NBER Working Papers 13367, National Bureau of Economic Research, Inc.
  4. Sumner J. La Croix & James Mak & Louis A. Rose, 1993. "The Political Economy of Urban Land Reform in Hawaii," Working Papers 199313-R, University of Hawaii at Manoa, Department of Economics.
  5. Akramov, Kamiljon T. & Omuraliev, Nurbek, 2009. "Institutional change, rural services, and agricultural performance in Kyrgyzstan:," IFPRI discussion papers 904, International Food Policy Research Institute (IFPRI).
  6. Sebastian Galiani & Ernesto Schargrodsky, 2005. "Property Rights for the Poor: Effects of Land Titling," Business School Working Papers proprightspoor, Universidad Torcuato Di Tella.
  7. Quy-Toan Do & Lakshmi Iyer, 2008. "Land Titling and Rural Transition in Vietnam," Economic Development and Cultural Change, University of Chicago Press, vol. 56, pages 531-579.
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Cited by:
  1. Niclas Berggren & Christian Bjørnskov, 2012. "Does Religiosity Promote Property Rights and the Rule of Law?," Economics Working Papers 2012-08, School of Economics and Management, University of Aarhus.
  2. Cha, Myung Soo & Kim, Nak Nyeon, 2012. "Korea's first industrial revolution, 1911–1940," Explorations in Economic History, Elsevier, vol. 49(1), pages 60-74.

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