How does the lack of legitimacy of property rights affect the dynamics of the creation of the rule of law? The authors investigate the demand for the rule of law in post-communist economies after privatization under the assumption that theft is possible, that those who have "stolen" assets cannot be fully protected under a change in the legal regime toward rule of law, and that the number of agents with control rights over assets is large. They show that a demand for broadly beneficial legal reform may not emerge because the expectation of weak legal institutions increases the expected relative return to stripping assets, and strippers may gain from a weak and corrupt state. The outcome can be inefficient even from the narrow perspective of the asset-strippers.
Bibliographic Details
Main Authors: |
Hoff, Karla,
Stiglitz, Joseph E. |
Language: | English |
Published: |
World Bank, Washington, DC
2005-12
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Subjects: | ADVERSE EFFECTS,
AGENCY PROBLEMS,
AGGREGATE DEMAND,
AGGREGATE SUPPLY,
ASSETS,
CAPITAL FLIGHT,
CONSTANT RETURNS TO SCALE,
CORPORATE GOVERNANCE,
CORRUPT PRACTICES,
CORRUPTION,
CREDIT RATIONING,
DEMOCRACY,
DISCOUNTED VALUE,
EAST EUROPEAN,
ECONOMIC PERFORMANCE,
ECONOMIC POWER,
EQUILIBRIUM,
EXPECTED RETURN,
EXPECTED RETURNS,
EXTERNALITIES,
GNP,
GOVERNANCE INDICATORS,
GROWTH PATH,
INCOME,
INEQUALITY,
INSTITUTIONAL CHANGE,
INSTITUTIONAL REFORM,
INTEREST RATE,
JUSTICE,
LAW INDICATOR,
LAWS,
MACROECONOMIC POLICIES,
MACROECONOMIC POLICY,
MACROECONOMIC STABILIZATION,
MACROECONOMIC STABILIZATION POLICY,
MARKET ECONOMY,
MONETARY POLICY,
NATURAL RESOURCES,
OLIGARCHY,
PAYOFFS,
POLITICAL INSTITUTIONS,
PRIVATE PROPERTY,
PRODUCTIVE ASSETS,
PROPERTY RIGHTS,
PUBLIC GOOD,
RULE OF LAW,
STEALING,
TRANSITION ECONOMIES,
TRANSITION ECONOMY,
WEALTH,
WEALTH CREATION, |
Online Access: | http://documents.worldbank.org/curated/en/2005/12/6442799/creation-rule-law-legitimacy-property-rights-political-economic-consequences-corrupt-privatization
https://hdl.handle.net/10986/8581
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