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Are both dimensions of property rights "efficient"?

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  • Pál Czeglédi

Abstract

The "efficient institutions view" on property rights claims that property rights emerged and are enforced when their enforcement maximizes net wealth. In a cross-country pattern this is usually understood as the prediction that economic development creates the incentives to provide higher quality property rights, but this claim is highly debated. This paper tries to take various property rights scholars’ arguments seriously and see property rights quality as a two dimensional concept, the two dimensions being the definition and the assignment of property rights. The paper derives a measure for these two dimensions of property rights and shows that it is the assignment dimension which is determined by development, while the definition dimensions is rather determined by cultural factors, especially those deeper factors that seem to reflect a long-run effect of Western European culture. According to the paper, the main reasons behind this may be the difference in the expropriability of income generated by an improvement of each dimension, and the way such improvements may or may not affect countries' catching up process.

Suggested Citation

  • Pál Czeglédi, 2015. "Are both dimensions of property rights "efficient"?," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 12(1), pages 41-69, July.
  • Handle: RePEc:liu:liucej:v:12:y:2015:i:1:p:41-69
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    File URL: http://eaces.liuc.it/18242979201501/182429792015120103.pdf
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    References listed on IDEAS

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    1. Robert C. Feenstra & Robert Inklaar & Marcel P. Timmer, 2015. "The Next Generation of the Penn World Table," American Economic Review, American Economic Association, vol. 105(10), pages 3150-3182, October.
    2. Jamie Bologna & Joshua C. Hall, 2014. "Economic Freedom Research: Some Comments and Suggestions," Working Papers 14-23, Department of Economics, West Virginia University.
    3. BenYishay, Ariel & Betancourt, Roger, 2014. "Unbundling democracy: Political rights and civil liberties," Journal of Comparative Economics, Elsevier, vol. 42(3), pages 552-568.
    4. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    5. Alchian, Armen A. & Demsetz, Harold, 1973. "The Property Right Paradigm," The Journal of Economic History, Cambridge University Press, vol. 33(01), pages 16-27, March.
    6. Alberto Alesina & Eliana La Ferrara, 2003. "Ethnic Diversity and Economic Performance," Harvard Institute of Economic Research Working Papers 2028, Harvard - Institute of Economic Research.
    7. Allen, Douglas W., 2015. "On Hodgson on property rights," Journal of Institutional Economics, Cambridge University Press, vol. 11(04), pages 711-717, December.
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    More about this item

    Keywords

    property rights; efficient institutions; economic development; culture;

    JEL classification:

    • P14 - Economic Systems - - Capitalist Systems - - - Property Rights
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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