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Private Protection of Property Rights, Inequality, and Economic Growth in Transition Economies

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  • Constantin Sonin

    (Russian European Center for Economic Policy)

Abstract

For economies in transition, the issues of property rights protection provided by the state and implications for economic performance are very important. The paper develops an endogenous growth model with incomplete capital markets and the level of public protection of property rights determined by voting (possibly different from the majority voting). An exogenous in-flow to the economy that constitutes a rent-seeking pie reduces incentives to invest in production and negatively affects the growth rate. An empirical investigation verifies the implications of the model using cross-section data on Russian regions. During transition (since 1992), Russian regions demonstrated enormous differences in growth rates. It is found that these differences may be explained by initial conditions and effectiveness of institutions. Also, positive impact of inequality on the level of public protection of property rights is found and a theoretical explanation for this phenomenon in the framework of the model is provided.

Suggested Citation

  • Constantin Sonin, 2000. "Private Protection of Property Rights, Inequality, and Economic Growth in Transition Economies," Econometric Society World Congress 2000 Contributed Papers 1300, Econometric Society.
  • Handle: RePEc:ecm:wc2000:1300
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    References listed on IDEAS

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    Cited by:

    1. Anastasiya Penska, 2015. "Determinants of Corruption in Ukrainian Regions: Spatial Analysis," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 42.

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