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A “de Soto Effect” in Industry? Evidence from the Russian Federation

Listed author(s):
  • Alexei Karas

    (Social Science Department, Roosevelt Academy, Middleburg, Netherlands)

  • William Pyle

    ()

    (Economics Department, Middlebury College, Middlebury, VT 05753,)

  • Koen Schoors

    (Department of Economics, Ghent University, Ghent, Belgium and Bank of Finland, BOFIT)

The empirical literature assessing the connection between land rights, access to finance and investment activity has focused largely on actors that, for multiple reasons, might face difficulties accessing credit. Communities of small-scale farmers or poor urban households in developing countries, that is, may not be the best place to look for evidence as to whether more secure land rights are sufficient to facilitate borrowing by providing borrowers with a collateralizable asset. We explore this relationship in a setting in which financial market frictions are apt to be less severe – i.e., among large, urban, industrial enterprises. Exploiting policy-induced variation across Russian regions, we use recently-collected survey data to show that private rights to land do indeed facilitate access to external financing and promote investment. This finding is supplemented by additional survey evidence that points to private land serving as an important source of collateral.

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File URL: http://www.hse.ru/data/2012/11/22/1248413795/19EC2012.pdf
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Paper provided by National Research University Higher School of Economics in its series HSE Working papers with number WP BRP 19/EC/2012.

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Length: 33 pages
Date of creation: 2012
Publication status: Published in WP BRP Series: Economics / EC, November 2012, pages 1-33
Handle: RePEc:hig:wpaper:19/ec/2012
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  1. J. David Brown & John Earle & Almos Telegdy, 2005. "The Productivity Effects of Privatization: Longitudinal Estimates from Hungary, Romania, Russia, and Ukraine," CERT Discussion Papers 0508, Centre for Economic Reform and Transformation, Heriot Watt University.
  2. Field, Erica Marie, 2005. "Property Rights and Investment in Urban Slums," Scholarly Articles 3634150, Harvard University Department of Economics.
  3. Timothy J. Besley & Konrad B. Burchardi & Maitreesh Ghatak, 2012. "Incentives and the De Soto Effect," The Quarterly Journal of Economics, Oxford University Press, vol. 127(1), pages 237-282.
  4. Sebastian Galiani & Ernesto Schargrodsky, 2005. "Property Rights for the Poor: Effects of Land Titling," Business School Working Papers proprightspoor, Universidad Torcuato Di Tella.
  5. Dewatripont, Mathias & Roland, Gérard, 1993. "The Design of Reform Packages Under Uncertainty," CEPR Discussion Papers 860, C.E.P.R. Discussion Papers.
  6. Erica Field, 2005. "Property Rights and Investment in Urban Slums," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 279-290, 04/05.
  7. Simeon Djankov & Peter Murrell, 2002. "Enterprise Restructuring in Transition: A Quantitative Survey," Journal of Economic Literature, American Economic Association, vol. 40(3), pages 739-792, September.
  8. Alston, Lee J & Libecap, Gary D & Schneider, Robert, 1996. "The Determinants and Impact of Property Rights: Land Titles on the Brazilian Frontier," Journal of Law, Economics and Organization, Oxford University Press, vol. 12(1), pages 25-61, April.
  9. J. David Brown & John S. Earle & Almos Telegdy, "undated". "The Productivity Effects of Privatization: Longitudnal Estimates for Hungary, romania, Russia, and Ukraine," Upjohn Working Papers and Journal Articles jse20063, W.E. Upjohn Institute for Employment Research.
  10. Besley, Timothy, 1995. "Property Rights and Investment Incentives: Theory and Evidence from Ghana," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 903-937, October.
  11. Saul Estrin & Jan Hanousek & Evzen Kocenda & Jan Svejnar, 2009. "The Effects of Privatization and Ownership in Transition Economies," Journal of Economic Literature, American Economic Association, vol. 47(3), pages 699-728, September.
  12. Glaeser, Edward L. & Scheinkman, Jose A., 1996. "The Transition to Free Markets: Where to Begin Privatization," Journal of Comparative Economics, Elsevier, vol. 22(1), pages 23-42, February.
  13. Brasselle, Anne-Sophie & Gaspart, Frederic & Platteau, Jean-Philippe, 2002. "Land tenure security and investment incentives: puzzling evidence from Burkina Faso," Journal of Development Economics, Elsevier, vol. 67(2), pages 373-418, April.
  14. Anders Aslund, 2007. "Russia's Capitalist Revolution: Why Market Reform Succeeded and Democracy Failed," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 4099, January.
  15. Bertaud, Alain & Renaud, Bertrand, 1997. "Socialist Cities without Land Markets," Journal of Urban Economics, Elsevier, vol. 41(1), pages 137-151, January.
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