The Effects of Property Rights on Economic Performance

This study augments the neoclassical growth model proposed by Mankiw, Romer, and Weil (1992) to analyze the effects of the property rights protection on the levels of economic performance, measured by per capita GDP, across countries. The augmented model predicts that (1) the accumulation of physical and human capital, and therefore the level of per capita GDP in a country, is positively related with the degree of property rights protection as well as with the saving rates and (2) the effects of the saving rates on the level of per capita GDP in a country are positively related with the degree of property rights protection. Empirical evidence shows that the predictions of the augmented model are consistent with the variations in the levels of per capita GDP across countries