Does Economic Development Require ‘Certain’ Property Rights?

Abstract

The purpose of this chapter is to re-examine the conventional wisdom regarding the impact of increased levels of secure property rights on the level of income per capita across the world. Rather than focus on increasing the level of security for property rights, economic development involves identifying the optimal level of property rights insecurity. In order to understand the role of insecure property rights in promoting economic development, we apply Allan Schmid's (2006) basic insight - sometimes property is excessively secure - into understanding the relative economic performances of Great Britain in the years prior and following the Glorious Revolution, France in the decades before and after the French Revolution, and the United States from independence to the Civil War. In each instance, reforms moved the level of insecure property rights closer to their optimal level.

Keywords: property rights, economic development, Allan Schmid

JEL Classification: O17; P14