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Abstract:
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"Formalizing property rights is a popular idea. Endorsements range from Ronald Coase, Milton Friedman, Francis Fukayama, Jeanne Kirkpatrick, to David Owen, and Margaret Thatcher. Bill Clinton publicly declared that de Soto was 'probably the world’s most important living economist' for his work on property rights formalization. Even the World Bank now largely agrees with de Soto’s analysis, stating that '[l]and is a key asset for the rural and urban poor.' The goal of this paper is to determine whether such widespread praise for property rights formalization is justified based on an analysis of the available empirical literature on the subject. Particular attention will be paid to the importance of considering the various derivations of property rights in culturally relative terms.
"The paper is structured as follows. Part I offers a general introduction to the property rights formalization literature, along with de Soto’s thesis and primary claims. Part II critiques de Soto’s methodology and data. Part III compares de Soto’s results with those of other empirical studies measuring the efficacy of property rights formalization. Part IV focuses on how these lessons have been applied using a case study from Indonesia and examples from South Africa. Finally, Part V summarizes the promise and perils of property rights formalization. In conclusion, property rights formalization does hold the promise of unlocking capital and spurring economic development, but reform must be both comprehensive and culturally relative considering the unique cultural, social, and political heritage of the societies in question."
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