Is Codification of Informal Property Institutions Necessary for Economic Development?

Controversy surrounds the importance of formal versus informal property rights institutions in the current development literature. Hernando de Soto attributes the poor economic performance of developing countries to insecure property rights. Taking this argument further, de Soto continues to argue that informal property rights are not sufficient to promote economic growth, and advocates codification of these informal rights. In this paper, we provide arguments supporting the view that informal institutions may be sufficient to stimulate economic development and that the codification of these institutions may not be necessary.

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