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Land rights, local financial development and industrial activity: evidence from Flanders (nineteenth–early twentieth century)

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  • Nicolas Devijlder

    (Universiteit Gent)

  • Koen Schoors

    (Universiteit Gent
    National Research University Higher School of Economics)

Abstract

In this paper, we investigate the hypothesis that the economic divergence across Flemish localities between 1830 and 1910 is explained by the theory of Hernando de Soto. We hypothesize that the uniform land rights installed after the French revolution provided borrowers with an attractive form of collateral. Conditional on the presence of local financial development provided by a new government-owned bank this eased access to external finance and fostered industrial and commercial economic activity. Using primary historical data of about 1179 localities in Flanders, we find that the variation in the local value of land (collateral) and the variation in local financial development jointly explain a substantial amount of the variation in non-agricultural employment accumulated between 1830 and 1910. By 1910, industrial and commercial economic activity was more developed in localities where both early (1846) rural land prices were high and early (1880) local financial development was more pronounced, which is in line with the ‘de Soto’ hypothesis.

Suggested Citation

  • Nicolas Devijlder & Koen Schoors, 2020. "Land rights, local financial development and industrial activity: evidence from Flanders (nineteenth–early twentieth century)," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 14(3), pages 507-550, September.
    • Handle: RePEc:spr:cliomt:v:14:y:2020:i:3:d:10.1007_s11698-019-00196-9
    DOI: 10.1007/s11698-019-00196-9
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    Cited by:

    1. Deininger,Klaus W. & Ali,Daniel Ayalew, 2022. "How Urban Land Titling and Registry Reform Affect Land and Credit Markets : Evidencefrom Lesotho," Policy Research Working Paper Series 10043, The World Bank.

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    More about this item

    Keywords

    De Soto; Financial institutions; Industrial development; Land prices; Flanders; Nineteenth to twentieth centuries;
    All these keywords.

    JEL classification:

    • N93 - Economic History - - Regional and Urban History - - - Europe: Pre-1913
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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