Evaluating Alternative Measures of Institutional Protection of Private Property and Their Relative Ability to Predict Economic Development

Journal of Private Enterprise, Forthcoming

28 Pages Posted: 17 Jun 2014 Last revised: 19 Jun 2015

See all articles by Daniel L. Bennett

Daniel L. Bennett

University of Louisville

Hugo Joaquin Faria

Instituto de Estudios Superiores de Administración (IESA), Finance Center

James D. Gwartney

Florida State University - Department of Economics

Daniel R. Morales

Asunto Económico

Date Written: January 7, 2015

Abstract

Economic theory and a growing body of empirical literature suggest that private property rights are an important determinant of economic development. In this paper, four commonly used measures of institutional protection of private property rights are assessed, including their relative ability to predict the level of GDP per capita. The risk of expropriation measure from the International Country Risk Guide, the rule of law measure from the World Governance Indicators, and the property rights index from the Economic Freedom of the World exert a similar and robust positive impact on the level of economic development. The executive constraints measure from Polity IV exerts a much smaller impact, and is sensitive to the model specification. The relative strengths and weaknesses of each measure are also addressed. The analysis provides researchers with guidance on selecting an appropriate measure of private property institutions for studies of economic performance.

Keywords: Capitalist Institutions, Comparative Economic Development, Economic Freedom, Legal Institutions, Private Property Rights, Rule of Law

JEL Classification: K11, O17, P14, P48

Suggested Citation

Bennett, Daniel and Faria, Hugo Joaquin and Gwartney, James D. and Morales, Daniel R., Evaluating Alternative Measures of Institutional Protection of Private Property and Their Relative Ability to Predict Economic Development (January 7, 2015). Journal of Private Enterprise, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2451143 or http://dx.doi.org/10.2139/ssrn.2451143

Hugo Joaquin Faria

Instituto de Estudios Superiores de Administración (IESA), Finance Center ( email )

James D. Gwartney

Florida State University - Department of Economics ( email )

Tallahassee, FL 30306-2180
United States

Daniel R. Morales

Asunto Económico ( email )

Santo Domingo
Dominican Republic

HOME PAGE: http://www.asuntoeconomico.com

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
95
Abstract Views
1,253
Rank
524,236
PlumX Metrics