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Causes and Effects of Private Property Rights Security

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  • Van Noort, S.

Abstract

Private property rights security is currently seen as central to explaining cross-country differences in economic development. Variation in private property rights security itself is perceived to be best explained by differences in the degree to which the political system is able to constrain the despotic power of state executives. I reassess the existing evidence for these two hypotheses and find that: (1) higher levels and significant changes in private property rights security and constraints on the executive are not correlated with higher levels of income and (changes in) growth rates; (2) the commonly used instrument for constraints on the executive and private property rights security - the natural log of European settler mortality - is invalid because it is associated with current levels of income besides its effect through private property rights security and constraints on the executive; and (3) the regularly cited Korean case is in fact evidence against these hypotheses. I provide explanations for these findings and call for a rethinking of which type of institutions and policies are decisive for growth.

Suggested Citation

  • Van Noort, S., 2017. "Causes and Effects of Private Property Rights Security," Cambridge Working Papers in Economics 1746, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:1746
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    File URL: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1746.pdf
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    1. Sergei Guriev & Anton Kolotilin & Konstantin Sonin, 2011. "Determinants of Nationalization in the Oil Sector: A Theory and Evidence from Panel Data," Journal of Law, Economics, and Organization, Oxford University Press, vol. 27(2), pages 301-323.
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    4. Christopher Hajzler, 2012. "Expropriation of foreign direct investments: sectoral patterns from 1993 to 2006," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(1), pages 119-149, April.
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    8. Noort, S., 2018. "The Importance of E ective States: State Capacity and Economic Development," Cambridge Working Papers in Economics 1821, Faculty of Economics, University of Cambridge.
    9. North, Douglass C. & Weingast, Barry R., 1989. "Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England," The Journal of Economic History, Cambridge University Press, vol. 49(04), pages 803-832, December.
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    Cited by:

    1. Noort, S., 2018. "The Importance of E ective States: State Capacity and Economic Development," Cambridge Working Papers in Economics 1821, Faculty of Economics, University of Cambridge.

    More about this item

    Keywords

    Institutions; Private Property Rights Security; Economic Development; Con- straints on the Executive;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
    • P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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