Journal of Economic Growth

, Volume 4, Issue 2, pp 185–211 | Cite as

Contract-Intensive Money: Contract Enforcement, Property Rights, and Economic Performance

  • Christopher Clague
  • Philip Keefer
  • Stephen Knack
  • Mancur Olson


We introduce a new, easily accessed and objective measure of the enforceability of contracts and the security of property rights. This measure, called “contract-intensive money” or CIM, is based on citizens’ decisions regarding the form in which they choose to hold their financial assets. Country case studies show that CIM varies over time in response to political events in ways predicted by our arguments. We also show that CIM is positively related to investment and growth rates, and to the relative size of contract-dependent sectors of the economy.

contract enforcement property rights governance economic growth 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Barro, Robert J. (1991). “Economic Growth in a Cross-Section of Countries, ” Quarterly Journal of Economics106, 407–443.Google Scholar
  2. Barro, Robert J., and Jong-Wha Lee. (1993). “International Comparisons of Educational Attainment, ” Journal of Monetary Economics32, 363–394.Google Scholar
  3. Borner, S., A. Brunetti, and B. Weder. (1995). Political Credibility and Economic Development. New York: St. Martin's Press.Google Scholar
  4. Bruno, Michael, and William Easterly. (1998). “Inflation Crises and Long-Run Growth, ” Journal of Monetary Economics41, 3–26.Google Scholar
  5. Clague, Christopher, Philip Keefer, Stephen Knack, and Mancur Olson. (1996). “Property and Contract Rights in Autocracies and Democracies, ” Journal of Economic Growth1, 243–276.Google Scholar
  6. Cukierman, Alex, and Steven Webb. (1995). “Political Influence on the Central Bank: International Evidence, ” World Bank Economic Review9, 397–423.Google Scholar
  7. DeLong, J. Bradford, and Larry Summers. (1991). “Equipment Investment and Economic Growth, ” Quarterly Journal of Economics106, 445–502.Google Scholar
  8. Easterly, William. (1993). “How Much Do Distortions Affect Growth?” Journal of Monetary Economics32, 187–212.Google Scholar
  9. The Europa World Yearbook. (various years). London: Europa Publications.Google Scholar
  10. Galor, Oded, and J. Zeira. (1993). “Income Distribution and Macroeconomics, ” Review of Economic Studies60, 35–52.Google Scholar
  11. Gastil, Raymond D. (various years). Freedom in the World. Westport, Conn.: Greenwood.Google Scholar
  12. Grierson, P. J. H. (1904). The Silent Trade. Edinburgh: William Green.Google Scholar
  13. Gurr, Ted Robert. (1990). Polity II: Political Structures and Regime Change: 1800–1986. Ann Arbor, MI: Inter-University Consortium for Political and Social Research.Google Scholar
  14. Haggard, Stephan, and Robert R. Kaufman. (1992). The Politics of Economic Adjustment: International Constraints, Distributive Conflicts, and the State. Princeton, NJ: Princeton University Press.Google Scholar
  15. Hall, Robert, and Charles Jones. (1996). “The Productivity of Nations. ” NBER Working Paper No. 5812.Google Scholar
  16. Hayek, Friedrich A. (1948). “The Meaning of Competition. ” In Friedrich A. Hayek (ed.), Individualism and Economic Order(pp. 92–106). Chicago: University of Chicago Press.Google Scholar
  17. International Monetary Fund. (various issues). International Financial Statistics Yearbook.Google Scholar
  18. Hobbes, Thomas. (1958 [1651]). Leviathan. Indianapolis, IN: Bobbs-Merrill.Google Scholar
  19. King, Robert G., and Ross Levine. (1993a). “Finance and Growth: Schumpeter Might Be Right, ” Quarterly Journal of Economics108, 717–737.Google Scholar
  20. King, Robert G., and Ross Levine. (1993b). “Finance, Entrepreneurship and Growth, ” Journal of Monetary Economics32, 513–542.Google Scholar
  21. Knack, Stephen, and Philip Keefer. (1995). “Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Measures, ” Economics and Politics7, 207–227.Google Scholar
  22. Knack, Stephen, and Philip Keefer. (1997). “Does Social Capital Have an Economic Payoff?” Quarterly Journal of Economics112, 1251–1288.Google Scholar
  23. Kobrin, Stephen J. (1985). “Expropriation as an Attempt to Control Foreign Forms in Developing Countries. ” In T. Brewer (ed), Political Risks in International Business. New York: Praeger.Google Scholar
  24. La Porta, Rafael, Florencio Lopez-de-Silanes, Andrei Shleifer, and Robert W. Vishny. (1998). “Lawand Finance, ” Journal of Political Economy106, 1113–1155.Google Scholar
  25. Levine, Ross. (1997). “Financial Development and Economic Growth: Views and an Agenda, ” Journal of Economic Literature35, 688–726.Google Scholar
  26. Levine, Ross. (1998). “The Legal Environment, Banks, and Long-Run Economic Growth, ” Journal of Money, Credit, and Banking30, 596–613.Google Scholar
  27. Levine, Ross, and David Renelt. (1992). “ASensitivity Analysis of Cross-Country Growth Regression, ” American Economic Review82, 942–963.Google Scholar
  28. Mauro, Paolo. (1995). “Corruption and Growth, ” Quarterly Journal of Economics110, 681–712.Google Scholar
  29. North, Douglass C. (1990). Institutions, Institutional Change, and Economic Performance. Cambridge: Cambridge University Press.Google Scholar
  30. Olson, Mancur. (1992). “The Hidden Path to a Successful Economy. ” In Christopher Clague and Gordon Rausser (eds), The Emergence of Market Economies in Eastern Europe(pp. 55–76). Cambridge, MA: Blackwell.Google Scholar
  31. Olson, Mancur. (1993). “Dictatorship, Democracy and Development, ” American Political Science Review87, 567–576.Google Scholar
  32. Olson, Mancur. (1996). “Big Bills Left on the Sidewalk: Why Some Nations Are Rich, and Others Poor, ” Journal of Economic Perspectives10, 3–24.Google Scholar
  33. Pritchett, Lant. (1996). “Where Has All the Education Gone?” Policy Research Working Paper No. 1581, World Bank.Google Scholar
  34. Rosenberg, Nathan, and L. E. Birdzell. (1986). How the West Grew Rich: The Economic Transformation of the Industrial World. New York: Basic Books.Google Scholar
  35. Scully, Gerald W. (1988). “The Institutional Framework and Economic Development, ” Journal of Political Economy96, 652–662.Google Scholar
  36. Sullivan, Michael J. (1991). Measuring Global Values. New York: Greenwood.Google Scholar
  37. Summers, Robert, and Alan Heston. (1991). “The PennWorld Table (Mark V): An Expanded Set of International Comparisons, 1950–88, ” Quarterly Journal of Economics106, 327–368.Google Scholar
  38. Townsend, Robert M. (1983). “Financial Structure and Economic Activity, ” American Economic Review73, 895–911.Google Scholar
  39. Williamson, Oliver. (1983). “Credible Commitments: Using Hostages to Support Exchange, ” American Economic Review73, 519–540.Google Scholar
  40. Williamson, Oliver. (1985). The Economic Institutions of Capitalism. New York: Free Press.Google Scholar
  41. Wright, Lindsay M. (1982). “A Comparative Survey of Economic Freedoms. ” In Raymond Gastil (ed), Freedom in the World, 1982. Westport, Conn.: Greenwood.Google Scholar

Copyright information

© Kluwer Academic Publishers 1999

Authors and Affiliations

  • Christopher Clague
    • 1
  • Philip Keefer
    • 2
  • Stephen Knack
    • 3
  • Mancur Olson
    • 4
  1. 1.Department of EconomicsSan Diego State UniversityUSA
  2. 2.Development Research GroupWorld BankUSA
  3. 3.IRISUniversity of MarylandUSA
  4. 4.IRIS and Department of EconomicsUniversity of Maryland atCollege Park

Personalised recommendations