Abstract: This paper is motivated by the emphasis on secure property rights as a determinant of economic development in recent literature. The authors use village and household level information from about 800 villages throughout China to explore whether legal reform increased protection of land rights against unauthorized reallocation or expropriation with below-average compensation by the state. The analysis provides nation-wide evidence on a sensitive topic. The authors find positive impacts, equivalent to increasing land values by 30 percent, of reform even in the short term. Reform originated in villages where democratic election of leaders ensured a minimum level of accountability, pointing toward complementarity between good governance and legal reform. The paper explores the implications for situations where individuals and groups hold overlapping rights to land.

This paper is motivated by the emphasis on secure property rights as a determinant of economic development in recent literature. The authors use village and household level information from about 800 villages throughout China to explore whether legal reform increased protection of land rights against unauthorized reallocation or expropriation with below-average compensation by the state. The analysis provides nation-wide evidence on a sensitive topic. The authors find positive impacts, equivalent to increasing land values by 30 percent, of reform even in the short term. Reform originated in villages where democratic election of leaders ensured a minimum level of accountability, pointing toward complementarity between good governance and legal reform. The paper explores the implications for situations where individuals and groups hold overlapping rights to land.

Effective property rights protection plays a fundamental role in promoting economic performance. Yet measurement problems make the relationship between property rights and entrepreneurship an ambiguous issue. As an advancement on previous research in this paper we propose a new approach to the evaluation of the security of property rights based on direct measures that overcomes some limitations of previous studies. We apply this new metrics to a survey of manufacturing firms in Russia to identifying the economic effects associated with the lack of property protection in a transition economy. Our analysis supports the view that there is a close relationship between institutions, property rights and economic growth. Our findings confirm that redistributive risks provide a depressing effect on investment and innovative activity of manufacturing enterprises and potentially result in a huge loss in efficiency and economic growth, which in other institutional settings could have been avoided.

This title was first published in 2003. Many former communist republics strive to adopt a market economy in which the privatisation of landed property is a key element. Generally, it is expected that by doing so, economic development will take off, improving food security and decreasing rural poverty. The relationship between changing land regulations, economic development and poverty is complex and yet little understood. With land reform, governments in transitional economies expect to achieve economic growth and thus alleviation of rural poverty. Nowadays, there is ample research to prove that, to be effective, land policy reforms need to be complemented with institutional reforms, and rural development activities. It puts forward a model for rapid assessment of project progress in which macro-economic indicators are applied in a systematic way to give insight to concepts such as land tenure security and food security and to provide warning signals for less-desired developments as a result of project implementation.

In 2005, the Supreme Court ruled that the city of New London, Connecticut, could condemn fifteen residential properties in order to transfer them to a new private owner. Although the Fifth Amendment only permits the taking of private property for “public use,” the Court ruled that the transfer of condemned land to private parties for “economic development” is permitted by the Constitution—even if the government cannot prove that the expected development will ever actually happen. The Court’s decision in Kelo v. City of New London empowered the grasping hand of the state at the expense of the invisible hand of the market. In this detailed study of one of the most controversial Supreme Court cases in modern times, Ilya Somin argues that Kelo was a grave error. Economic development and “blight” condemnations are unconstitutional under both originalist and most “living constitution” theories of legal interpretation. They also victimize the poor and the politically weak for the benefit of powerful interest groups and often destroy more economic value than they create. Kelo itself exemplifies these patterns. The residents targeted for condemnation lacked the influence needed to combat the formidable government and corporate interests arrayed against them. Moreover, the city’s poorly conceived development plan ultimately failed: the condemned land lies empty to this day, occupied only by feral cats. The Supreme Court’s unpopular ruling triggered an unprecedented political reaction, with forty-five states passing new laws intended to limit the use of eminent domain. But many of the new laws impose few or no genuine constraints on takings. The Kelo backlash led to significant progress, but not nearly as much as it may have seemed. Despite its outcome, the closely divided 5-4 ruling shattered what many believed to be a consensus that virtually any condemnation qualifies as a public use under the Fifth Amendment. It also showed that there is widespread public opposition to eminent domain abuse. With controversy over takings sure to continue, The Grasping Hand offers the first book-length analysis of Kelo by a legal scholar, alongside a broader history of the dispute over public use and eminent domain and an evaluation of options for reform.