The 'Washington Consensus' development policies include liberalising markets and strengthening property rights. Liberalising markets requires largely that a government relax existing controls. Strengthening property rights, however, may require expanded
government capacity. Thus, a country implementing Consensus reforms may liberalise
capital markets, but leave property rights weak. Is this country better off than it would have been without reforms?
Our existing research addressed this question in the analytically simple case of no property rights. We found that access to international capital markets had a positive and a negative effect: it allowed more efficient allocation of resources over time, but encouraged capital
flight from the country with weak property rights into, for example, foreign bank accounts. In transferring resources from poor, capital scarce societies to richer, capital abundant ones, this is inefficient.
This grant allows us to extend this research to cases in which property rights are merely weak - everything between perfect property rights (economic analysis' traditional domain) and entirely absent rights. The resulting richer theory will allow better engagement with empirical research (which uses gradated measures of property rights' strength) and
the policy debate on financial market liberalisation and capital mobility.
Author: Manfred Kerber Date: 01 January 2010 Journal article
Author: Colin Rowat Date: 08 July 2009 Full research report
Author: Colin Rowat Date: 08 July 2009 Research summary
Author: Manfred Kerber Date: 03 July 2009 Discussion paper
Author: Colin Rowat Date: 01 January 2009 Discussion paper
Author: Jayasri Dutta Date: 01 January 2007 Discussion paper