Property Rights and their Impact on the Wealth of Nations - A Cross-Country Study
This paper investigates the quality of property rights and long-term economic growth in an international cross-section of countries in 1975-1995. The empirical tests indicate that the impact of private property rights on growth is positive and simultaneously determined. Correcting for the simultaneity bias reveals a regression coefficient which is quite remarkable: A doubling in the index of the quality of property rights leads to a more than doubling in per capita incomes. In addition, private property rights also impact the 'traditional' determinants of economic growth. Thus it seems appropriate to class private property rights with the ultimate sources of economic growth.