The Role of Property Rights as an Institution: Implications for Development Policy

Karol C. Boudreaux, Mercatus Center at George Mason University

Abstract

After years of overlooking the central role that property rights play in economic development, scholars and policy makers are beginning to recognize that tenure security and effective property rights are key building blocks of a prosperous society.

When they are secure and divisible, property rights unleash entrepreneurship and provide a basis for trade and markets. Secure property rights also allow for human flourishing, as they provide individuals with increased autonomy and control over resources.

In many countries legislative, regulatory and, at times, customary barriers create tenure insecurity and block the divisibility of property rights. Well-intentioned development programs may, at times, create similar obstacles.

Economic development programs with a property component should focus on improving the security and divisibility of property rights. This may be achieved, at least in part, by decentralizing property rights decision making, allowing for the evolution of property rights rules, and developing credible and effective supporting institutions, including a viable rule of law.