Article | Open Access | Published: 31 May 2006
Weak Property Rights and Market Access
| Views: | 22 | | | Downloads: | 18 |
Abstract:
The following argument is one of the most standard in economics: when a factor of production like capital is relatively scarce, the return that it earns in a competitive economy should be high. This has posed a paradox in the context of poor countries, in which capital tends to be scarce. The argument would obviously predict high returns to capital-high interest rates for them. These, in turn, would create incentives for investors in richer countries (with lower returns to capital) to invest in the poorer country. In this way, poor countries would grow, catching up to richer countries. In practice, however, only some poor countries have been growing quickly; others continue to to languish in poverty. Further, people in very poor countries often send their wealth broad pre precisely the opposite of what the argument above would suggest. Research has found that these flows can be quite large as a share of domestic wealth. Table 1 shows that this is particularly true in Sub-Saharan Africa.
Keywords:
Market Liberalization, Capital Market, Competitive Economy.
Publisher:
ILMA UNIVERSITY
Published:
31 May 2006
Issue:
Issue 1 : Volume 2
E-ISSN:
2409-6520
P-ISSN:
2414-8393
This is an open access article distributed under the terms of the Creative Commons Attribution CC BY 4.0 license, which permits any use, distribution, and reproduction of the work without further permission provided the original author(s) and source are credited.