Question

Economic progress within a country seems to depend on how well property rights are protected. Explain the relationship between property rights, corruption, and economic progress and their importance to the economic development of a nation. Explain your answer with a well-constructed and cogent response.

Answer 1

Economic growth of a country depends a lot upon the property rights and the state of corruption. Economies prosper when more and more businesses are established. Hence there must be some sort of law that protects the property of the business. The property law shall be properly enforced. If the property laws are not present, then there would be increase in unlawful tactics to cover property rights and continue business which hinders the economic development. When the property rights are secured it provides a lot of opportunities to the individuals and businesses to deal with the property in the manner they want and justify its costs and benefits. If people have the confidence that their property is safe and will be protected by the government then they would utilize the property more efficiently which helps the nation to progress. Again if the property rights are weak then firms and business would have to pay bribes and other such illegal amounts to protect their resource from being used by others. This increases the corruption and also affects the economic progress since well established and powerful businesses can develop relationships with these bribe takers and pay less amount. But the new entrants would find it difficult to thrive in such situations.

There are several other benefits of having a property rights in place. When ownership is established upon a property and they are well protected, the property can be mortgaged or pledged to secure a loan. Nowadays to expand a business, debts are essential. Without proper property rights, most crucial debts are not variable which hampers them. Hence we can see that corruption, economic rights and progress of economy are all inter related.

Only when economies consider the importance of property rights they can open the opportunities to progress. With the increase in corruption, businesses tend to move to other places which have less corrupt culture. Hence having a strict property law to enforce property rights would reduce corruption related to property and lead to progress.