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Property Rights and Financial Development: The Legacy of Japanese Colonial Institutions


  • Dongwoo Yoo
  • Richard H. Steckel


Several studies link modern economic performance to institutions transplanted by European colonizers and here we extend this line of research to Asia. Japan imposed its system of well-defined property rights in land on some of its Asian colonies, including Korea, Taiwan and Palau. In 1939 Japan began to survey and register private land in its island colonies, an effort that was completed in Palau but interrupted elsewhere by World War II. Within Micronesia robust economic development followed only in Palau where individual property rights were well defined. Second, we show that well-defined property rights in Korea and Taiwan secured land taxation and enabled farmers to obtain bank loans for capital improvements, principally irrigation systems. Our analytical model predicts that high costs of creating an ownership updating system and a citizen identity system discourage a short-sighted government from implementing these crucial components, the absence of which gradually makes land registration obsolete. Third, considering all of Japan's colonies, we use the presence or absence of a land survey as an instrument to identify the causal impact of new institutions. Our estimates show that property-defining institutions were important for economic development, results that are confirmed when using a similar approach with British Colonies in Asia.

Suggested Citation

  • Dongwoo Yoo & Richard H. Steckel, 2010. "Property Rights and Financial Development: The Legacy of Japanese Colonial Institutions," NBER Working Papers 16551, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:16551
    Note: DAE LE

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    References listed on IDEAS

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    Cited by:

    1. Berggren, Niclas & Bjørnskov, Christian, 2013. "Does religiosity promote property rights and the rule of law?," Journal of Institutional Economics, Cambridge University Press, vol. 9(02), pages 161-185, June.
    2. Myung Soo Cha, 2015. "Unskilled wage gaps within the Japanese Empire," Economic History Review, Economic History Society, vol. 68(1), pages 23-47, February.
    3. Cha, Myung Soo & Kim, Nak Nyeon, 2012. "Korea's first industrial revolution, 1911–1940," Explorations in Economic History, Elsevier, vol. 49(1), pages 60-74.

    More about this item

    JEL classification:

    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • N2 - Economic History - - Financial Markets and Institutions
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development


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