Working Paper: NBER ID: w16551
Authors: Dongwoo Yoo; Richard H. Steckel
Abstract: Several studies link modern economic performance to institutions transplanted by European colonizers and here we extend this line of research to Asia. Japan imposed its system of well-defined property rights in land on some of its Asian colonies, including Korea, Taiwan and Palau. In 1939 Japan began to survey and register private land in its island colonies, an effort that was completed in Palau but interrupted elsewhere by World War II. Within Micronesia robust economic development followed only in Palau where individual property rights were well defined. Second, we show that well-defined property rights in Korea and Taiwan secured land taxation and enabled farmers to obtain bank loans for capital improvements, principally irrigation systems. Our analytical model predicts that high costs of creating an ownership updating system and a citizen identity system discourage a short-sighted government from implementing these crucial components, the absence of which gradually makes land registration obsolete. Third, considering all of Japan's colonies, we use the presence or absence of a land survey as an instrument to identify the causal impact of new institutions. Our estimates show that property-defining institutions were important for economic development, results that are confirmed when using a similar approach with British Colonies in Asia.
Keywords: No keywords provided
JEL Codes: K11; N20; O1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Completion of land surveys (R52) | Secure property rights (P14) |
| Well-defined property rights (P14) | Economic development (O29) |
| Secure property rights (P14) | Land taxation (R51) |
| Land taxation (R51) | Bank loans for capital improvements (G21) |
| Bank loans for capital improvements (G21) | Sustainable economic growth (O44) |
| Absence of ownership updating system (Y70) | Reduced likelihood of sustainable economic growth (F69) |
| Absence of citizen identity system (P39) | Reduced likelihood of sustainable economic growth (F69) |
| Property-defining institutions (D02) | Economic performance (P17) |
| Secure property rights (P14) | Economic growth in Palau (O56) |