Law and Property Rights

Abstract Contemporary development orthodoxy holds that formal property rights are a necessary precondition for economic growth. This paper argues against that conventional wisdom. We first examine the roots of that doctrine: from Weber’s sociology of law, through the neo-institutional economics of Coase, Demsetz, and North, to De Soto’s prescriptions. We next trace how this theory was narrowed into a single prescription, exported by development institutions, and enforced through global indicators that reduce social realities to numerical rankings. The paper advances two claims. First, formal property rights are neither necessary nor sufficient for growth and their effect relies on context, particularly whether reform is internally grounded or externally imposed. China’s post-1978 expansion, relying on informal and quasi-formal arrangements rather than statutory entitlement, supplies a sustained empirical counterexample. Second, the prevailing model rests on a fallacy that property reform is a neutral process. In reality, creating new entitlements requires destroying customary ones. Cambodia’s titling regime highlights how this can be a politically coercive act borne by those least able to resist, even while framed as aid. Ukraine, where farmland liberalization advanced through domestic politics as well as reconstruction pressures from external creditors, illustrates both possibilities.