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Norton, Seth W. --- "Empirical Issues in Culture and Property Rights" [2004] ELECD 101; in Colombatto, Enrico (ed), "The Elgar Companion to the Economics of Property Rights" (Edward Elgar Publishing, 2004)

Book Title: The Elgar Companion to the Economics of Property Rights

Editor(s): Colombatto, Enrico

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781840649949

Section: Chapter 4

Section Title: Empirical Issues in Culture and Property Rights

Author(s): Norton, Seth W.

Number of pages: 23

Extract:

4 Empirical issues in culture and property
rights
Seth W. Norton*


The paradox
There is ample evidence of a link between economic institutions and eco-
nomic performance. Douglass North's seminal economic history of the West
and allied analysis by Rosenberg and Birdzell document a relationship be-
tween economic institutions ­ property rights, the rule of law, and economic
freedom and economic performance (North 1981, 1990, 1994; Rosenberg
and Birdzell 1986). More recent research entails econometric analysis of the
influence of economic institutions on economic growth and concludes that
better specified or less attenuated property rights and the rule of law are
associated with higher economic growth rates (Scully 1988, 1992; Barro
1991; Baumol 1994; Barro and Sala-i-Martin 1995; Knack and Keefer 1995;
Knack 1996; Keefer and Knack 1997; Dawson 1998). More recent evidence
shows that favorable economic institutions are particularly important for
eliminating poverty (Scully 1997; Grubel 1998; Norton 1998, 2003).
The strong relationship between economic institutions and human well-
being presents a paradox. The vast majority of the world's inhabitants would
be better off living in regimes with well-specified and enforced property
rights. Yet many of the world's inhabitants do not enjoy those benefits.
Property rights and the rule of law are frequently weak and sometimes nearly
non-existent. A profound question underlies the paradox. Why are well-
specified and enforced property rights so rare?
Various explanations have been put forward to account for this puzzle.
Demsetz (1964, 1967) and Anderson and Hill (1975) ...