Property Rights and Financial Development: The Legacy of Japanese Colonial Institutions

53 Pages Posted: 22 Nov 2010 Last revised: 24 Mar 2021

See all articles by Dongwoo Yoo

Dongwoo Yoo

affiliation not provided to SSRN

Richard H. Steckel

Ohio State University (OSU) - Economics; National Bureau of Economic Research (NBER)

Date Written: November 2010

Abstract

Several studies link modern economic performance to institutions transplanted by European colonizers and here we extend this line of research to Asia. Japan imposed its system of well-defined property rights in land on some of its Asian colonies, including Korea, Taiwan and Palau. In 1939 Japan began to survey and register private land in its island colonies, an effort that was completed in Palau but interrupted elsewhere by World War II. Within Micronesia robust economic development followed only in Palau where individual property rights were well defined. Second, we show that well-defined property rights in Korea and Taiwan secured land taxation and enabled farmers to obtain bank loans for capital improvements, principally irrigation systems. Our analytical model predicts that high costs of creating an ownership updating system and a citizen identity system discourage a short-sighted government from implementing these crucial components, the absence of which gradually makes land registration obsolete. Third, considering all of Japan's colonies, we use the presence or absence of a land survey as an instrument to identify the causal impact of new institutions. Our estimates show that property-defining institutions were important for economic development, results that are confirmed when using a similar approach with British Colonies in Asia.

Suggested Citation

Yoo, Dongwoo and Steckel, Richard H., Property Rights and Financial Development: The Legacy of Japanese Colonial Institutions (November 2010). NBER Working Paper No. w16551, Available at SSRN: https://ssrn.com/abstract=1712229

Dongwoo Yoo (Contact Author)

affiliation not provided to SSRN ( email )

No Address Available

Richard H. Steckel

Ohio State University (OSU) - Economics ( email )

1945 North High Street
Columbus, OH 43210-1172
United States
614-292-5008 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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