Property Rights and Economic Development

Formal private property rights (“FPPRs”) have been advocated as an important prerequisite to economic development: a legal right to property ownership motivates economic players to engage in economic activities when these activities yield property interests, and this, in turn, contributes to economic development. All of the OECD countries today, which are economically advanced, protect FPPRs. However, there are also historical instances in which absence of FPPRs did not necessarily result in economic stagnation, but instead led to significant economic growth. This article analyzes cases in which FPPRs promoted economic development and those in which substantial economic growth took place without clearly defined FPPRs. FPPRs also need to be balanced against public interest; the government may limit FPPRs by expropriation for a public objective, including economic development. This paper also discusses the point of balance between FPPRs and public interest in property that may change with the different stages of economic development