Secure Property Rights Research Articles

The Efficiency and Demands of the Italian Justice System

A well-functioning judicial system is necessary for enforcing contracts and guaranteeing security of property rights. In fact, a good judicial system could reduce transaction costs and limit opportunistic behaviour, thus promoting growth through increasing specialization and innovation, developing financial and credit markets and promoting competition. What, then, are the causes of lengthy trials in Italy? We can identify at least four: free negotiation of lawyers’ fees; poor quality regulation; no implementation of ad hoc policy measures; host bureaucratic delays. It is well-known that pollution (recurrent changes in the rules and fragmented and slow courses of action) as well as considerable modifications in the law occur in Italy and this may consequently affect the demand for justice. As Gravelle (1990) states, “the demand for trials until the number of trials demanded by litigants is equal to the capacity of courts” (p. 255). The high level of Italian litigiousness could therefore derive from a disproportionate dimension and lack of transparency in the regulatory framework, the mutability of legal parameters, and the large number of lawyers, all of which submerge the courts. There are five actors who are interested in the duration of litigation, i.e. the two parties, their lawyers and the judge. Three of them have an interest in prolonging the process, one (the judge) is a neutral spectator, and the plaintiff is the only one who would gain from concluding the process in as short a time as possible. The quality of this service, which elsewhere is marked by the rapidity of court cases and procedures, is connected with the level of public resources necessary for managing this public service and the results obtained. In Italy the number of judges paid from public expenditure is in line with European levels. However, when compared to European systems, Italian justice is slower and less efficient.

Property Rights, Governance, and Economic Development

AbstractIn this review article we give an intuitive account of why good institutions in general, and secure property rights in particular, matter for economic growth and development. We also discuss implications for good governance, defined as the efficient provision of property rights and other aspects of governance. Finally, we briefly touch on political institutions that might be conducive to good governance and thus economic development.

Crossing the threshold from founder management to professional management in Russian firms

Purpose– The purpose of this paper is to bring together a strategic choice perspective and an institutional perspective in order to address the key research questions: how do Russian founder-CEOs perceive the institutional environment when succession issues are taken into consideration?; how do the perceived characteristics of different formal and informal institutions affect the founder-CEO’s decision to delegate authority to a professional CEO?; and what are the main barriers to founder-CEO succession in threshold firms in emerging markets such as Russia?Design/methodology/approach– Using a data set of 500 entrepreneurial companies from fast growing industries in Russia, the paper defines and studies threshold firms and analyses how various perceived characteristics of the institutional environment in emerging markets influence the likelihood of transition from founder management to professional management.Findings– Institutional factors such as poor security of property rights and dependence of the business on relationships with government officials have a negative impact on the likelihood of founder-CEO succession in threshold firms in emerging markets. At the same time, the perception of contract law as insecure increases the likelihood of transition from founder management to professional management.Originality/value– Most research on initial succession deals with internal organisational factors and does not consider external environments and their influence on founder-CEO departure and willingness to exit from company management. This study is unique in its focus on the external environment and institutional factors and their impact on management transitions in threshold firms in emerging economies.

Territorial States: Monopolies in the Market for Justice

The medieval Muslim state system did not resemble that which developed in Europe. Many reasons for this have been asserted. One which has never been discussed is that the commercial and merchant classes developed alternative, exit-based, strategies to secure property rights. In such a system, first analyzed by Charles Tiebout, the development of voice-based institutions is not an efficient use of resources. Over the long run exit can be an effective strategy to bargain with monarchs over property rights as long as a trans-regional system of law, such as Islamic shariah, exists. Such a system may also reinforce a tendency to invest in mobile rather than fixed capital.

Economic development, institutions, and biodiversity loss at the global scale

Current accelerating biodiversity loss is by many conservationists regarded as a result of economic development. Some economists agree on this viewpoint but argue it is valid at low income levels because of the need to secure a minimum living standard. On the other hand, economic development at higher income levels can instead mitigate biodiversity loss because of improved willingness and affordability to implement measures such as protected areas. This so-called environmental Kuznets relation is tested in this study by econometric analysis of cross-sectional data on a global scale. However, the results do not support this relation. Instead, we found a relation between economic and institutional development where economic development decreases biodiversity loss at a minimum level of institutional quality, i.e. minimum capacity to implement and secure property rights for the citizens. Our results thus question policies that neglect institutional quality for reversing biodiversity loss. Further, it was found that biodiversity loss increases with invasive species, high average temperature and precipitation, and spatial autocorrelation.

Institutional Origins of Subjective Well-Being: Estimating the Effects of Economic Freedom on National Happiness

We exploit the cross-country differences in economic freedom to examine the link between the quality of institutions and subjective well-being. Using Veenhoven’s happiness dataset, the evidence suggests countries with better economic institutions and higher level of economic freedom, captured by the security of property rights, open markets and more limited government, are significantly more likely to experience greater subjective well-being after controlling for structural confounders of national subjective well-being such as income, unemployment, inequality, social capital and life satisfaction. The effect of institutions on cross-national happiness is both significant and robust to different model specifications, estimation techniques and possible sources of endogeneity. Furthermore, our panel data analysis reveals that over time higher levels of economic freedom are associated with decreasing subjective well-being after controlling for state dependence and income.

Strategic Interactions Among Private and Public Efforts When Preventing and Stamping Out a Highly Infectious Animal Disease

AbstractUpon the outbreak of a contagious animal disease, a primary motive for restoring disease‐free status is often to regain access to international product markets. Efforts applied toward continuing or regaining such access generate a public good—all growers benefit regardless of the extent of private effort taken, while exclusion is impractical. Private incentives to take preventive measures and stamp‐out effort interact in complex ways. There are intra‐farm temporal interactions and also inter‐farm contemporaneous interactions. Public effort also takes place and interacts with private effort. This paper provides a succinct multi‐agent model to explore these interactions in social optimum and in Nash equilibrium, and also to explore how socially optimal and Nash behavior differ. Comparative statics under social optimality are more straightforward than under Nash equilibrium. Whether it is in social optimum or Nash equilibrium, public prevention effort complements both private prevention and private stamp‐out efforts. However, public stamp‐out effort substitutes for both private stamp‐out and private prevention efforts. Reasonable conditions are identified under which Nash levels of private prevention and stamp‐out efforts are both below socially optimal levels. Concerning policy prescriptions, secure property rights and low property transfer costs should promote prevention and eradication efforts. Other things being equal, public prevention effort should be more effective at improving welfare than comparable public stamp‐out effort. Subsidies on private effort should favor prevention because subsidies on eradication effort may discourage prevention effort. Even if products from diseased animals are safe to consume and acceptable to consumers, it may be optimal to destroy them.

Capitalism, Democracy, and Countermajoritarian Institutions

Is democracy compatible with thriving markets that produce long-term prosperity? To survive, a thriving market-economy requires restrictions on political choice, including the rule of law, secure property rights and the enforcement of contracts. This problem comes to the fore as many democratic theorists advocate fewer constraints on the choices by political officials. Robert Dahl, perhaps the most prominent theorists of democracy, asks “How democratic is the U.S. Constitution?” His answer: not very because of its many sources of constraints on politics.Americans take political and constitutional stability for granted. Yet, only 25 percent of all countries have a government free of violent turnover for a generation and the number of countries that have sustained democracy since 1950 is around two dozen. This paper advances a framework for understanding democratic stability, including three conditions: the limit condition, which enhances democracy’s survival by lowering the stakes of politics and preventing coups; the consensus condition which supports citizen-coordination to defend against possible transgressions; and the adapta­tion con­dition, which holds that successful constitutions adapt the constitution to shocks and crises. Constitutions embody the limit condition through countermajoritarian con­straints. The force of this paper is to demonstrate the value of appropriately chosen countermajoritarian provisions in the constitution that constrain democracy. In particular, such constraints are necessary to support long-term, stable democracy as well as a thriving market economy.

Ruling elites’ rotation and asset ownership: implications for property rights

We provide a theory and empirical evidence indicating that the rotation of ruling elites in conjunction with elites’ asset ownership could improve property rights protection in non-democracies. The mechanism that upholds property rights is based on elites’ concern about the security of their own asset ownership in the event they lose power. Such incentives provide a solution to the credible commitment problem in maintaining secure property rights when institutional restrictions on expropriation are weak or absent.

Credit Rating Agencies and the IPE: Not as influential as thought?

ABSTRACTDo Credit Rating Agencies (CRAs) affect national policy? This study critically examines assertions of a possible convergence to neo-liberal standards induced by sovereign bond ratings. By arguing that the role of the agencies in the global political economy has been exaggerated, the study finds that CRAs do not have a direct causal effect on domestic economic reforms. Employing a sample that covers the great majority of rated countries, it is shown that there is a robust trend towards deregulation and reform in accordance with neo-liberal standards. Nevertheless, sovereign bond ratings are not directly related to this process. Lower rated countries, or those more frequently downgraded, do not differ significantly from the highly rated countries in their pattern of policy reform. This result holds for policy domains such as regulation of credit, labour and business, inflation levels, legal structure and security of property rights, and the size of the public sector. It is concluded that the role of the CRAs as potential instigators of domestic reform is limited.

Payments for ecosystem services in developing world fisheries

AbstractPayments for Ecosystem Services (PES) is a powerful economic tool that gives positive conditional incentives for the provision of additional ecosystem services over the status quo, which has been used widely in terrestrial conservation. Interest in the concept of marine PES has recently emerged, but the fluid, transboundary and often common pool nature of marine ecosystems presents challenges for PES design and implementation. Here, we consider the potential role of PES in addressing current gaps in fisheries management. Used in combination with conventional regulatory approaches, PES may increase private sector engagement and generate more sustainable financing for fisheries management whilst spreading accountability throughout the supply chain. The approach is most likely to be feasible and effective in commercially valuable fisheries with: (i) demand for one or more ecosystem service and a threat to supply; (ii) suitable baseline data available and potential management actions underpinned by robust science; (iii) clarity and security of property rights; (iv) capacity for hybrid multi‐level governance; (v) capacity for rigorous monitoring, control and surveillance; and (vi) potential for financial sustainability of the scheme. An examination of four contrasting fisheries – Namibian hake, Mozambican shallow‐water shrimp, Western and Central Pacific skipjack tuna and Bangladesh hilsa – demonstrates that a developing world fishery will rarely fulfil each of these preconditions a priori, but that the potential for successful application of PES still exists. In practice, PES design will depend on the institutional context and require creative and innovative approaches to the maintenance of conditionality and additionality.

Quality of institutions and the BRIC countries agro-food exports

Purpose – The purpose of this paper is to investigate the impacts of institutional quality (IQ) in exporting and importing countries on agro-food exports from the world's leading emerging economies: Brazil, the Russian Federation, India and China (BRIC countries). Design/methodology/approach – Measuring is based on using the gravity trade model and econometric panel data analysis for the period 1998-2009. Findings – Agro-food exports from the BRIC countries, particularly Brazil and China, have increased. The Russian Federation has experienced stagnating and volatile patterns. Brazil and India have strengthened market shares in the existing importing markets, while the Russian Federation has experienced severe deterioration. The export of existing products is more important than of new products. Agro-food exports are positively associated with IQ and the size of the gross domestic product in exporting and importing countries, but negatively with distance. Research limitations/implications – Among IQ variables, the focus is on the indices of legal structure and security of property rights and freedom to trade internationally in agro-food importing countries and the BRIC exporting countries. Practical implications – Different institutions and their quality can affect agro-food exports differently. The impact of institutions is not uniform across product groups. Originality/value – This paper adds the impacts of IQ on agro-food exports. Except for processed products for final household consumption, agro-food exports from the BRIC countries are positively associated with the quality of the legal structure, the security of property rights and the freedom to trade internationally as IQ in exporting and importing countries.

Futures of Tropical Forests (sensu lato)

AbstractWhen net deforestation declines in the tropics, attention will be drawn to the composition and structure of the retained, restored, invaded, and created forests. At that point, the seemingly inexorable trends toward increased intensities of exploitation and management will be recognized as having taken their tolls of biodiversity and other forest values. Celebrations when a country passes this ‘forest transition’ will then be tempered by realization that what has been accepted as ‘forest’ spans the gamut from short‐rotation mono‐clonal stands of genetically engineered trees to fully protected old growth natural forest. With management intensification, climate change, species introductions, landscape fragmentation, fire, and shifts in economics and governance, forests will vary along gradients of biodiversity, novelty of composition, stature, permanence, and the relative roles of natural and anthropogenic forces. Management intensity will increase with the increased availability of financial capital associated with economic globalization, scarcity of wood and other forest products, demand for biofuels, improved governance (e.g., security of property rights), improved accessibility, and technological innovations that lead to new markets for forest products. In a few places, the trend toward land‐use intensification will be counterbalanced by recognition of the many benefits of natural and semi‐natural forests, especially where forest‐fate determiners are compensated for revenues foregone from not intensifying management. Land‐use practices informed by research designed and conducted by embedded scientists will help minimize the tradeoffs between the financial profits from forest management and the benefits of retention of biodiversity and the full range of environmental services.

Property rights and sustainable irrigation: A developing country perspective

While the role of secure property rights contributing to sustainable natural resource management is increasingly recognized, translating that into practice is more challenging, especially in developing countries. This article presents a framework for understanding the role of property rights for effective irrigation systems and then explores the complexity of property rights to land, water, and infrastructure and their underlying institutions. Understanding property rights in practice requires acknowledging legal pluralism—the coexistence of many types and sources of law, which can be used as the basis for claiming rights over the resources. Property rights do not necessarily imply full ownership, but are composed of different bundles of rights that may be held by different claimants—the state, user groups, families, or individuals. These rights are critical for the authority, incentives, and resources for irrigation operation and maintenance. As resources become more scarce, property rights systems need to adapt to reduce conflict and provide incentives for saving water. However, efforts to improve irrigation by changing property rights systems have often failed because they have not recognized the difficulty of transplanting property rights systems from one place to another. Institutional change needs to be seen as an organic process, building on existing norms and practices, rather than as an exercise in social engineering.

Chiefs: Economic Development and Elite Control of Civil Society in Sierra Leone

We study the effect of constraints on chiefs' power on economic outcomes, citizens' attitudes, and social capital. A paramount chief in Sierra Leone must come from a ruling family originally recognized by British colonial authorities. In chiefdoms with fewer ruling families, chiefs face less political competition, and development outcomes are significantly worse today. Variation in the security of property rights over land is a potential mechanism. Paradoxically, with fewer ruling families, the institutions of chiefs' authority are more highly respected, and measured social capital is higher. We argue that these results reflect the capture of civil society organizations by chiefs.

The roles of land tenure reforms and land markets in the context of population growth and land use intensification in Africa

This article reviews the past and potential future roles of land tenure reforms and land markets in Sub-Saharan Africa (SSA) as responses to population growth in the process of land use intensification and livelihood transformation. The farm size distribution and the existence of an inverse relationship (IR) between farm size and land productivity in SSA and the implications of this relationship for efficiency and equity are investigated. More secure property rights and removal of restrictions on land markets have the potential to create both efficiency and equity benefits, but there are high risks of elite capture of large land areas with inefficient and inequitable outcomes. This situation is the case not only in land-abundant areas but also in urban and peri-urban areas where increasingly larger proportions of people will make their living. Increasing population pressure in densely populated rural areas contributes to more rapid rural–urban migration, and creating alternative livelihood opportunities for the migrating youth population is essential to achieving economic development with social stability.

New Institutional Economics: Complementary Aspects

The purpose of this article was to understand how the theoretical assumptions of the micro analytical level of New Institutional Economics (NIE), encompassing the Resource-Based View (RBV), the Transaction Cost Economics (TCE), and associated to the Economic Costs Measurement (ECM), might influence the choice of governance structures of companies. The method used was a literature review and descriptive research. Parallel to these theories, the RBV approach was chosen in order to discuss the relationship with the boundaries of the firm, and to identify the complementary aspects between these theoretical issues. The results showed that, when these approaches are considered together, it is evident that the possession and maintenance of strategic resources (VBR) characterizes property rights that need to be protected by legal mechanisms (ECT and ECM), able to minimize their loss of value, and secure property rights. Ultimately, the sustainability of a competitive advantage will be through structures that consider the presence of specific assets (ECT), measurability (ECM), and condition for competitiveness (VBR).

Nova Economia Institucional: Vertentes Complementares

The purpose of this article was to understand how the theoretical assumptions of the micro analytical level of New Institutional Economics (NIE), encompassing the Resource-Based View (RBV), the Transaction Cost Economics (TCE), and associated to the Economic Costs Measurement (ECM), might influence the choice of governance structures of companies. The method used was a literature review and descriptive research. Parallel to these theories, the RBV approach was chosen in order to discuss the relationship with the boundaries of the firm, and to identify the complementary aspects between these theoretical issues. The results showed that, when these approaches are considered together, it is evident that the possession and maintenance of strategic resources (VBR) characterizes property rights that need to be protected by legal mechanisms (ECT and ECM), able to minimize their loss of value, and secure property rights. Ultimately, the sustainability of a competitive advantage will be through structures that consider the presence of specific assets (ECT), measurability (ECM), and condition for competitiveness (VBR).

Land Property Rights and Resource Allocation

In this paper we review the most significant empirical literature on the causal effects of land property rights. The literature indicates that secure property rights boost investment in both rural and urban areas. These effects, however, do not appear to be the result of improved credit conditions. In rural areas, clear land rights also lead to increases in productivity and farm earnings. In contrast, for urban areas, the evidence on the effect on earnings is mixed. We find little empirical evidence suggesting that land titling programs enhance the development of land markets. Finally, some evidence suggests that land titling induces changes in household structure that foster human capital accumulation and may help to increase the incomes of future generations.

The Strategies of Forbidden Love: Family across Racial Boundaries in Nineteenth-Century North Carolina

This article contends that although local beliefs and legal edicts attempted to discourage sexual and familial relationships between women of color and white men in North Carolina, free women of mixed ancestry and white men developed relationships that mimicked legally-sanctioned marriages. These unions often produced children who maintained frequent interaction with both parents. In nineteenth-century Hertford County, North Carolina, free women of mixed ancestry and their white partners developed creative strategies to deal with the legal limitations inherent in their situation. Women and men in these relationships found ways to secure property rights for women and children and developed methods to prevent legal scrutiny of their living arrangements.