Prosperity Unbound: Building Property Markets with Trust

205 Pages·2007·0.73 MB·English

by  Elena Panaritis

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Prosperity Unbound
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With the support of INSEAD Euro-Asia and Comparative
Research Centre and special thanks to Gordon Redding
and Charlotte Butler.
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Prosperity Unbound
Building Property Markets With Trust
Elena Panaritis
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© Elena Panaritis 2007
Foreword © Francis Fukuyama 2007
Prologue © Frannie Léautier 2007
All rights reserved. No reproduction, copying or transmission of this
publication may be made without written permission.
No paragraph of this publication may be reproduced, copied or transmitted
save with written permission or in accordance with the provisions of the
Copyright, Designs and Patents Act 1988, or under the terms of any licence
permitting limited copying issued by the Copyright Licensing Agency, 90
Tottenham Court Road, London W1T 4LP.
Any person who does any unauthorized act in relation to this publication
may be liable to criminal prosecution and civil claims for damages.
The author has asserted her right to be identified as the author of this
work in accordance with the Copyright, Designs and Patents Act 1988.
First published 2007 by
PALGRAVE MACMILLAN
Houndmills, Basingstoke, Hampshire RG21 6XS and
175 Fifth Avenue, New York, N. Y. 10010
Companies and representatives throughout the world
PALGRAVE MACMILLAN is the global academic imprint of the Palgrave
Macmillan division of St. Martin’s Press, LLC and of Palgrave Macmillan Ltd.
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and other countries. Palgrave is a registered trademark in the European
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ISBN-13: 978–1–4039–9346–5 hardback
ISBN-10: 1–4039–9346–7 hardback
This book is printed on paper suitable for recycling and made from fully
managed and sustained forest sources.
A catalogue record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Panaritis, Elena, 1968–
Prosperity unbound : building property markets with trust / Elena
Panaritis.
p. cm.
Includes bibliographical references and index.
ISBN-13: 978–1–4039–9346–5 (cloth)
ISBN-10: 1–4039–9346–7 (cloth)
1. Informal sector (Economics) 2. Right of property. 3. Economic
development. I. Title
HD2341.P355 2007
330–dc22 2006050306
10 9 8 7 6 5 4 3 2 1
16 15 14 13 12 11 10 09 08 07
Printed and bound in Great Britain by
Antony Rowe Ltd, Chippenham and Eastbourne
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To my parents Elli and Yiannis
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Contents
List of Figures ix
Foreword by Francis Fukuyama xi
Prologue by Frannie Léautier xv
Introduction: Why have I written this book? xvii
1 Informality and Unreality 1
Why are informal markets more prevalent in some
countries than in others? 4
The role of history 7
Institutions, organizations and property rights 9
“Unreal Estate” 11
Transforming the “Unreal” to Real 13
2 Policy and Politics of Land and Property 15
Adopting or creating institutions? 18
Forgotten pieces in the Cold War chess game 23
A segmented world 25
Macroeconomic reform was not enough 31
The limits of what we had to work with 33
Looking backward before going forward 35
Reality Check Analysis 38
3 Tipping Points 45
Trust makes property rights reliable 48
The ingredients of a secure property rights system 53
The importance of a reliable recording system 56
Socioeconomic benefits 58
vii
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viii Contents
4 A Transformation Begins 67
The beginning of change 70
Getting to the diagnosis 74
Getting closer to reality 76
A “melting pot” that had not quite done the job 78
The 1969 Agrarian Reform’s social revolution 82
A new kind of “protection” 87
Taking advantage of a new opportunity for
change 88
Further questions lead to best design 91
Drawing the solution 93
Special interests seek to undermine reform 96
5 Results through Partnerships 101
Measuring the impact 106
Transformation sticks when there is trust 112
What to look for in a partner 116
6 Solving the Puzzle 125
A holistic solution to the jigsaw puzzle 126
The when and how of strategy 129
How much of a “stomach” does the reformer
need to have? 132
The design 133
The high price of ignoring institutions 135
Acknowledgments 145
Notes 149
Bibliography 161
Index 177
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List of Figures
2.1 How Reality Check Analysis works 40
4.1 Peru’s institutions in 1990: a patch-work
of historical breaks 77
5.1 Perceptions of security in property rights
in Peru 107
5.2 Investment in property improvements
in Peru with property rights 108
5.3 Perceptions of increased property values
in Peru after obtaining property rights 109
5.4 Households that solicited loans based
on property rights 110
5.5 Number and amount of loans to property
owners after the reform 110
6.1 Key principles of property rights 129
6.2 Key elements of a strategy for property
rights reform 131
ix