Security of Property Rights for Whom?

Property insecurity of non-elites can be compatible with or even enhance economic growth, but it also encourages conflict-which can undermine long-term growth and economic development. Using a new set of indicators which measure the property insecurity of marginalized ethno-cultural minority groups, this article demonstrates that the severity of property insecurity for the worst-off group in a country is strongly associated with the onset of armed conflict, and-once civil war is controlled for-property insecurity for marginalized minorities corresponds with higher growth rates. Economic growth can occur when the property rights of elites are secure but marginalized minorities face a high risk of expropriation, as land may be reallocated into the hands of investors with skills and access to capital. However, the potentially growth-enhancing effect of forced displacement and resettlement is reduced, because the property insecurity of minorities also increases the likelihood of armed conflict.