Seminar with Assistant Professor Alisha Holland (Princeton University)
Title of presentation: "Private Property Against Public Works: How Rights Affect Development in Ecuador and Colombia".
Political economy models view property rights as the lynchpin to economic development. But many countries with rapid economic growth and large investments in productive infrastructure have weak property protections, such as China, Turkey, and Ecuador. This paper argues that weak property rights make it easier for governments to reallocate land for public projects. In contrast, strong property protections undermine public works by encouraging opportunistic behaviors, such as (1) holdout problems among existing property owners, (2) infrastructure trolls who deliberately purchase or invade land needed for public investments, and (3) group bargaining in which communities use their ability to delay projects to secure local public goods. I trace these mechanisms through case studies of transportation projects in countries with divergent national and subnational property protections, Colombia and Ecuador. Administrative data reveal that half of Colombia's national highway projects are delayed or cancelled due to challenges acquiring land, while almost none are in Ecuador where property protections are weaker. These findings bolster a prominent but neglected view of excessive property rights as a check on economic development.