Constitutional property rights protection and economic growth: evidence from the post-communist transition
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This paper seeks to estimate the economic growth effect of constitutional provisions for property rights protection. It does so using the unique situation in formerly communist countries in Central and Eastern Europe and the Caucasus where all but two introduced new constitutions after the fall of the Iron Curtain. The effects of implementing different constitutional provisions can therefore be observed in a group of countries with similar formal starting points. Estimates provide no evidence of positive effects and mainly point towards a negative conclusion: the introduction of constitutional protection of property rights is not associated with economic development in the long run, but tends to impose costs during a period of institutional transition and implementation proportional to the constitutional change.
KeywordsProperty rights Economic growth Constitutional political economy Transition
JEL ClassificationP16 P37 K40 O43
The idea for the paper arose from discussions with Niclas Berggren, Nils Karlson and Stefan Voigt at a workshop at the Ratio Institute in Stockholm. The paper is part of the Ratio Institute Project “Property rights, the conditions for enterprise and economic growth”. Financial support from the Marcus and Amalia Wallenberg Memorial Fund Foundation is gratefully acknowledged. I thank Sebastian von Engelhardt, Jerg Gutmann, Daniel Halvorsson, Annamaria Kubovcikova, Niklas Potrafke, participants at the 2012 World Congress of the Public Choice Societies (Miami) and two referees at this journal for comments that improved the paper. Niclas Berggren deserves special mention for providing many important suggestions. Vilhelm Krag Bjørnskov provided able research assistance.
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