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Institutions, Property Rights, and Growth

Published online by Cambridge University Press:  17 August 2016

Paul J. Zak
Paul J. Zak*
Affiliation:
Claremont Graduate University
*
Department of Economics, Claremont Graduate University, Claremont, CA 91711-6165, [email protected] or http://fac.cgu.edurzakp
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Summary

This paper presents a growth model in which property rights are insecure and costly to enforce. Losses of property provide the impetus to establish institutions which seek to enforce property rights. Institutions are shown to implement policies that enforce property rights. The model establishes that economies in which the institutional structure does not adequately protect property rights grow slowly, or not at all, while countries with better property rights protection grow in accordance with the standard neoclassical model. Because income inequality is a primary incentive to violate another’s property rights, the model also provides a positive theory of income redistribution. Empirical tests of the model’s predictions demonstrates that government expenditures that enforce property rights raise per capita income growth.

Résumé

Résumé

Ce modèle présente un modèle de croissance dans lequel les droits de propriété sont peu sûrs et coûteux à faire appliquer. Les pertes de propriété incitent à la mise en place d’institutions qui ont pour but de faire appliquer les droits de propriété. Nous montrons que les institutions font appliquer des politiques qui protègent les droits de propriété. Le modèle établit que les économies dont la structure institutionnelle ne protège pas de façon adéquate les droits de propriété ont une croissance faible ou nulle. Les économies dotées d’une meilleure protection des droits de propriété ont une croissance conforme au modèle néoclassique standart. Etant donné que l’inégalité des revenus est une source majeure de la violation des droits de propriété, ce modèle fournit également une théorie positive de la redistribution du revenu. Les tests empiriques des prédictions du modèle montrent que les dépenses gouvernementales en matière de protection des droits de propriété augmentent la croissance du revenu par tête.

Keywords

InstitutionsGrowthDevelopmentProperty RightsD9P16D74InstitutionsCroissanceDéveloppementDroits de propriétéD9P16D74
Type
I. Macroeconomics and National Accounting
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 68 , Special Issue 1-2: The New Economy: Implications and Viability , 2002 , pp. 55 - 73
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 2002 

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Footnotes

*

I have benefited from the comments of Michele Boldrin, John Fernald, Raquel Fernandez, Gary Hansen, Tatsuji Hayakawa, Fumio Hayashi, Rody Manuelli, Scott Page, Stergios Skeperdas, Yannis Venieris, Randy Wright and especially Herschel Grossman, W. Craig Stubblebine Phillip Swagel, Raouf Boucekkine and an anonymous referee, as well as participants at the Econometric Society North American Meeting, Cal Tech, the University of Pennsylvania, and Claremont Graduate University though they are not culpable for omissions or errors. Alacritous research assistance was provided by John Stinespring.

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