Property Rights and Financial Development: The Legacy of Japanese Colonial Institutions
Yoo and Steckel’s research clarifies the pathways between property-defining institutions and growth, and by incorporating work on a neglected continent, Asia. They divide property rights into two categories: institutions that define property rights, such as a land survey system and a land registration system; and those that protect property rights, such as land expropriation laws or constitutional safeguards against property takings. Yoo and Steckel assess the economic legacy of institutional change imposed by Japan on its Asian colonies, which were acquired through an opportunistic process of territorial expansion. The authors argue that decisions to colonize were exogenous to late 20th-century growth, a point substantiated by results from a quasi-experiment in Micronesia.
The inquiry is inspired by rates of economic growth that were vastly different across Asia, where Japan was the only Asian country to successfully begin industrialization in the late 19th century. Asian tigers (South Korea, Taiwan, Hong Kong, and Singapore) successfully industrialized in the second half of the 20th century, while other countries in the region are currently underway or have yet to begin. The ratio of per capita GDP between the most developed country and the least developed country in Asia is over 25:1. To what extent might contrasting systems of property rights account for differential growth?