The creation of the rule of law and the legitimacy of property rights : the political and economic consequences of a corrupt privatization
AbstractHow does the lack of legitimacy of property rights affect the dynamics of the creation of the rule of law? The authors investigate the demand for the rule of law in post-communist economies after privatization under the assumption that theft is possible, that those who have"stolen"assets cannot be fully protected under a change in the legal regimetoward rule of law, and that the number of agents with control rights over assets is large. They show that a demand for broadly beneficial legal reform may not emerge because the expectation of weak legal institutions increases the expected relative return to stripping assets, and strippers may gain from a weak and corrupt state. The outcome can be inefficient even from the narrow perspective of the asset-strippers.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 3779.
Date of creation: 01 Dec 2005
Date of revision:
Legal Products; Economic Theory&Research; Corruption&Anitcorruption Law; Public Sector Corruption&Anticorruption Measures; Governance Indicators;
Other versions of this item:
- Karla Hoff & Joseph E. Stiglitz, 2005. "The Creation of the Rule of Law and the Legitimacy of Property Rights: The Political and Economic Consequences of a Corrupt Privatization," NBER Working Papers 11772, National Bureau of Economic Research, Inc.
- K0 - Law and Economics - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-12-14 (All new papers)
- NEP-LAW-2005-12-14 (Law & Economics)
- NEP-PBE-2005-12-14 (Public Economics)
- NEP-REG-2005-12-14 (Regulation)
- NEP-TRA-2005-12-14 (Transition Economics)
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