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Projects - Details  
  Weak Property Rights: Financial Markets and Development

Dr Colin Rowat
Professor Jayasri Dutta
University of Birmingham

Dr Colin Rowat
Department of Economics
University of Birmingham
B15 2TT

Tel: 0121 414 3754
email: c.rowat@bham.ac.uk

Duration of Research
March 2005 - February 2007

A cluster of core policies associated with economic development have been identified as the 'Washington Consensus'. These include liberalisation (e.g. of financial markets and capital mobility) and strengthening property rights. Some estimates suggest that strengthening of property rights by half a standard deviation would halve global poverty.

Implicitly, the Consensus provides a theory of the first best:
When policies differ from their consensually agreed optima in many ways, moving closer to the optimum in one way may not improve welfare. This observation is significant as some of the Consensus' policy measures are more easily implemented than others: liberalising markets, for example often involves a loosening of governmental controls, while strengthening property rights may require the government to expand its capabilities.

Thus, in practice, encouraging development and poverty reduction requires sensitivity to broader issues of political economy, governance and institutional environment.

Recent theoretical research to which we have contributed suggests that easing financial market access may harm welfare in poor countries when property rights are absent. We propose to extend this research to situation with weak property rights. This should allow more nuanced assessment of policies designed to spur development through financial market liberalisation and the encouragement of capital mobility.

Project outputs include research papers and a conference to disseminate findings.

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Remarks, comments and contributions are welcome at: t.byne@econ.bbk.ac.uk
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Last updated November 2005
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