Property Rights Institutions and Investment

This paper examines the channels through
which alternative property rights institutions affect
investment. These institutions are defined by a
society's enforced laws, regulations, governance
mechanisms and norms concerning the use of resources. A
transaction cost framework is used to analyze the incentive
impact of various types of property rights, liability rules,
and rules regarding contracts. This framework is used to
discuss the legal and cultural conditions necessary for the
formation of productivity-enhancing organizations and the
proper role of government in providing the infrastructure
for private investment. A brief section examines the role of
cultural and religious norms in determining the economic
effectiveness of legal systems, with a focus on Islamic
countries. The final section evaluates empirical approaches
used to discover the specific ways property rights
structures affect investment and growth.