Sunday, November 04, 2007

Property Rights Do Matter for Development

Abdullah A. Dewan, Professor of Economics at Eastern Michigan University writes in The Daily Star (‘committed to people’s right to know’) Dhaka, Bangladesh (4 November) here:

The question "why do some countries prosper while others lag behind?" has animated the research interest of economists since Adam Smith. Although, Smith's analysis delved into the imperative role played by the division of labour in economic growth, it also accentuated the import of the political and legal institutions protecting economic activity in explaining the wealth of nations.”

Dr Adullah Dewan lists eleven factors associated with growth from the International Property Right Index (IPRI) constructed by Alexander C. Horst of the National Center for Policy Analysis, Washington DC.

They should be of interest to those considering what role institutional factors play, if any, in economic development (re: Greg Clark’s hypothesis in A Farewell to Alms, 2007, that they were not decisive in the development of Britain up to 1800 – because, he argues these factors were all in place since the 1300s, though this is debatable ).

Adam Smith focused on the division of labour as spanning all his four ages of man, from the transformation of hunting modes of subsistence into shepherding and farming, and not just its role in commercial society, which was distinguished by increasing returns in manufacturing.

He also focused heavily on the role of property, and justice, as much as the division of labour. Modern economists tend to concentrate on economic factors; Adam Smith a moral philosopher emphasized institutional factors in Lectures on Jurisprudence (1762-3), especially property relations. That growth economists are re-discovering their role in development along the lines of Adam Smith’s work is encouraging.


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