Economic Thought and Development: Institutional Theories

Inherence has created a trap between property rights, their relation to the state and the overall development of poorly performing economies. Earlier in this paper three important inherent relations have been mentioned: the relation of property rights and state, of institutions and development, and of developing policies and culture.
North has maintained that property rights are inherent to the state, given the fact that they need to be allocated and enforced by an organization that has control over others. The argument that institutions, property rights in particular, are inherent means towards growth and developmental goals has also been explored. The interrelationship between these elements is so clear, that we cannot avoid questioning why decision-makers of developing countries have not concentrated on the creation and enforcement of property rights.
Property rights conduce to growth though, paradoxically, "the process of growth is inherently destabilizing to a state." Given the fact that efficient property rights raise the overall income of the state but lower the tax revenues for the actual decision-maker or ruler, it is no that surprising to find inefficient property rights still being implemented in developing countries.
Given the common self-interest nature of the rulers, perhaps it is not a matter of them knowing that secure property rights have been a key factor for late developers, but rather finding the factors that predispose a state to have the encompassing interest Bradhan points out. …