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Faculty of Economics

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Van Noort, S.

Causes and Effects of Private Property Rights Security

CWPE1746

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.

Keywords: Institutions, Private Property Rights Security, Economic Development, Con- straints on the Executive

JEL Codes: O11 P16 P51

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PDF: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1746.pdf

Open Access Link: https://doi.org/10.17863/CAM.15508