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Enforcement of Property Rights and Underdevelopment

Author

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  • Era Dabla‐Norris
  • Scott Freeman

Abstract

The authors formalize the role of legal infrastructure in economic development in a general‐equilibrium model with endogenously determined property rights enforcement. The mutual importance of property rights protection and market production is illustrated by the model's multiplicity of equilibria. In one equilibrium, property rights are enforced, and market activity unhampered. In the other, property rights are not enforced, discouraging economic activity, which leaves the economy without the resources and the incentives to enforce property rights. Even identically endowed economies may therefore find themselves in very different equilibria.

Suggested Citation

  • Era Dabla‐Norris & Scott Freeman, 2004. "Enforcement of Property Rights and Underdevelopment," Review of Development Economics, Wiley Blackwell, vol. 8(3), pages 391-405, August.
    • Handle: RePEc:bla:rdevec:v:8:y:2004:i:3:p:391-405
    DOI: 10.1111/j.1467-9361.2004.00240.x
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    References listed on IDEAS

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    1. Jean Tirole, 1996. "A Theory of Collective Reputations (with applications to the persistence of corruption and to firm quality)," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 63(1), pages 1-22.
    2. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(3), pages 681-712.
    3. Costas Azariadis & Allan Drazen, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(2), pages 501-526.
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    Cited by:

    1. J. E. J. De Vrijer & Ms. Katrin Elborgh-Woytek & Mr. Julian Berengaut & Mr. Bogdan Lissovolik & Mr. Mark W Lewis, 2002. "An Interim Assessment of Ukrainian Output Developments, 2000-01," IMF Working Papers 2002/097, International Monetary Fund.
    2. Azmat Gani, 2018. "Contract Enforcement and Trade," Journal of Industry, Competition and Trade, Springer, vol. 18(1), pages 107-119, March.
    3. Gani, Azmat & Clemes, Michael D., 2013. "Modeling the effect of the domestic business environment on services trade," Economic Modelling, Elsevier, vol. 35(C), pages 297-304.
    4. Mehlum, Halvor & Moene, Karl & Torvik, Ragnar, 2003. "Predator or prey?: Parasitic enterprises in economic development," European Economic Review, Elsevier, vol. 47(2), pages 275-294, April.
    5. Gani, Azmat & Scrimgeour, Frank, 2016. "New Zealand's trade with Asia and the role of good governance," International Review of Economics & Finance, Elsevier, vol. 42(C), pages 36-53.
    6. Chakraborty Shankha & Dabla-Norris Era, 2011. "The Quality of Public Investment," The B.E. Journal of Macroeconomics, De Gruyter, vol. 11(1), pages 1-29, August.

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