Property Rights, Law, and Economic Development

This article explores the relationship between property rights and economic performance. Property rights, or more precisely, formal, individualized property rights, have long been regarded as the fundamental precondition for sustainable economic growth. However, the available empirical evidence shows that formal private ownership fails to bring about desirable economic outcomes in most developing countries despite the advantages claimed by numerous economists and lawyers. This puzzle can be addressed by taking into consideration such factors as the functioning of related markets, the influence of social norms, and the role of the state.