Property rights - the right to benefit from one’s effort. - Property rights - the right to benefit from one’s effort.
- Provide incentives to work hard.
- Encourage investment in physical and human capital.
- Encourage technological innovation.
- Without property rights:
Denied property rights farmers agreed secretly to divide communal land and assign it to individuals. - Denied property rights farmers agreed secretly to divide communal land and assign it to individuals.
- They could keep all they produced over the quota assigned by the government.
- Result: Xiaogang became a model for the rest of China.
- The agreement was signed in blood.
- Institutions of Economic Growth
- Honest Government
- Property rights are meaningless unless government guarantees property rights.
- Corruption bleeds resources away from productive entrepreneurs.
- Corruption takes resources away from more productive government activity.
- Next is a list of the 10 most and the 10 least corrupt countries. Are you surprised to see who is or who isn’t on these lists?
- Honest Government: The Good and the Bad
Political Stability – change of government within the rule of law. - Institutions of Economic Growth
- Political Stability – change of government within the rule of law.
- Changing governments without the rule of law results in uncertainty which leads to less investment in physical and human capital.
- In many nations civil war, military dictatorship, and anarchy have destroyed the institutions necessary for economic growth.
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