4 - Evidence on the Rise and Fall of Property Rights Gaps in Latin America

Summary

This chapter employs original data on land reform and property rights to empirically test the theory. Using data from Latin America from 1920–2010 and cross-tabulation, regression, and instrumental variables analysis, the chapter find strong evidence in support of the theory that property rights gaps are generated by authoritarian regimes where the ruling coalition of political elites does not overlap with landed elites. In contrast, property rights gaps are typically closed by democracies, especially when peasants are in the ruling coalition and legislative fractionalization does not give opposition lawmakers a chance to block reform. Property rights gaps are also closed by both authoritarian regimes and democracies when countries are forced into structural adjustment programs. And left-wing ideology and state capacity play a role well in property rights gaps. This chapter also finds that the governments that redistribute property without rights also distort crop prices to render beneficiaries dependent on the government, and through a comparative analysis of nationalizations of banks and natural resources shows that the withholding of property rights over land is strategic.