Interest groups, political investments and property rights enforcement in developing countries

It is a nearly established fact in the literature on economic growth and development that property rights---or the institutions that establish and enforce property rights---are vital for long-term economic growth. Investors, from small local businesspeople selling products in their local marketplace to large multinational corporations, will not fully commit their resources if they do not trust in the institutions that safeguard their property. Yet in most low- and middle-income countries the institutions that protect property rights for investors are weak and ineffectual. This dissertation proposes a new way of thinking about the emergence of credible commitments to strong, well-enforced property rights systems in low- and middle-income countries. In low- and middle-income countries the willingness and ability of interest groups to make political investments is the driving force in the ability of states to commit to strong, stable property rights institutions. Institutions matter for property rights enforcement, but the matter in conjunction with the political investments of interest groups. Several hypotheses are developed relating to the affect of political institutions, the existing level of property rights enforcement, and the availability of substitutes for property rights on the willingness and ability of interest groups to make political investments for property rights enforcement. These are tested using quantitative analyses as well as more detailed examinations of the property rights environment in Peru and Chile.