Property Rights, Development, and Democratic Transitions: The Path Ahead

Since the publication of Hernando de Soto’s landmark book The Mystery of Capital in 2000, the link between property rights and economic development, especially for the world’s poor, has become increasingly well understood. More recently, the events of the Arab Spring have thrown the relationship between property rights and democracy into sharper focus, emphasizing how the lack of access to property rights is intertwined with the lack of larger economic opportunity and democratic representation.

In the latest Economic Reform Feature Service article, Program Officer Anna Nadgrodkiewicz looks at the connection between property rights, good institutions, and democratic governance. “While private ownership in and of itself does not guarantee freedom and democracy, it certainly makes them possible if appropriate rules governing responsible and ethical behavior are put in place,” she writes. Pervasive economic exclusion, on the other hand, leads to weak rule of law, corruption, and institutions that do not protect citizens’ rights or encourage sustainable economic growth.

Article at a glance

• When property rights are not properly documented and property market institutions remain weak – as is the case in many countries – the informal sector dominates the economy and inhibits inclusive growth.
• This pervasive economic exclusion has a direct impact on the quality of democratic governance since widespread informality leads to weak rule of law and corruption.
• The need to broaden property rights, especially for small entrepreneurs, and to strengthen institutions that make property titles meaningful is key to the success of both democratic and market-oriented reforms in transition countries.

Anna Nadgrodkiewicz is a Program Officer for Global Programs at CIPE, where she works on projects involving democratic and market-oriented reform around the world. Prior to joining CIPE, she worked as a business consultant in her native Poland on the issues of competitiveness and market entry in Central and Eastern Europe. She holds a Master’s degree in German and European Studies from Georgetown University in Washington, DC.