10° 40' N, 61° 30' W

Tuesday, April 01, 2003

Growing Pains

Henry Farrell posts two good reviews of Hernando De Soto's Mystery of Capital (here)and William Easterly's Elusive Quest for Growth (here). He recognisies the importance of the two books, and the contribution they can make to the development debate. I have two observations, though with respect to Farrell's thoughts on De Soto's book.

Firstly, Farrell says that formalising informal property rights may institutionslise an unequal distribiton of property. Farrell here overlooks agrarian reform, was was practised in Taiwan, and is still an ongoing process in Brazil (no thanks to the Movimiento Sem Terra, the Landless Movement). Formalisation need not merely involve the legal recognition of the status quo, but can be progressive, giving the poor access to previously underutilised resources.

Secondly, Farrell brings up common property rights, and he is right to say that "it may not always be a good idea to make property rights fully exchangeable on impersonal national (or international) markets". This can go only so far though. Common property rights are important for sustainability, but they are, in essence, "static" systems, which adapt relatively slowly to change. As economic growth continues a tension tends to develop between a commom property systems and court-backed private property.

On the whole, though, Farrell is very much on track, and the reviews, as well as the books themselves, are well worth reading.