The Political Economy of Property Rights: An Examination Into the Components of Land Laws and Their Effects on Politics and Growth.

Abstract

Why is it that countries that implement property laws do not always perform according to the expectations of the economic theory of property rights? In addition, why do the results of these implementations vary across countries? In the case of land, the presence of property rights provides security, facilitates conflict resolution, encourages investment in the land, and allows landholders access to credit. These factors translate into individual increases in productivity and efficiency, which ultimately results in economic growth. Giving title to land is thought to provide property rights and is expected to have these beneficial outcomes. However, individual studies have found that giving title to land does not always have the expected economic effect. The theory of this dissertation is that property rights should not be viewed as an inseparable bundle. Rather, components of the property rights bundle are separable. Different components of the bundle can lead to different economic outcomes. Additionally, each component of the bundle, ownership, use, and transferability, results in different benefits for the owners of the factors production. Consequently, these groups will have preferences for different rights and pursue those rights in the political arena. Further, institutions that are more open to interest group influence will have more variation in the bundle of rights. This theory is tested using a newly created database of land law legislation. The results provide support for the hypotheses that different rights affect economic outcomes differently, and further that variation in emphasis of the property rights bundle provided, as influenced by institutional factors, can help to explain the cross-national variation and the deviations from predictions of basic property rights theory. .