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The Enforcement of Property Rights and Underdevelopment

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  • Era Dabla-Norris
  • Scott Freeman

Abstract

This paper formalizes the role of legal infrastructure in economic development in a general equilibrium model with endogenously determined property rights enforcement. It illustrates the mutual importance of property rights protection and market production by the model’s multiplicity of equilibria. In one equilibrium, property rights are enforced and market activity is unhampered. In the other, property rights are not enforced, which discourages economic activity and leaves the economy without the resources and incentives to enforce property rights. Even identically endowed economies may therefore find themselves in very different equilibria.

Suggested Citation

  • Era Dabla-Norris & Scott Freeman, 1999. "The Enforcement of Property Rights and Underdevelopment," IMF Working Papers 99/127, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:99/127
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    Cited by:

    1. J. E. J. De Vrijer & Katrin Elborgh-Woytek & Julian Berengaut & Bogdan Lissovolik & Mark W Lewis, 2002. "An Interim Assessment of Ukrainian Output Developments, 2000-01," IMF Working Papers 02/97, International Monetary Fund.
    2. Mehlum, Halvor & Moene, Karl & Torvik, Ragnar, 2003. "Predator or prey?: Parasitic enterprises in economic development," European Economic Review, Elsevier, vol. 47(2), pages 275-294, April.
    3. Gros, Daniel & Suhrcke, Marc, 2000. "Ten years after : what is special about transition countries?," HWWA Discussion Papers 86, Hamburg Institute of International Economics (HWWA).

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