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Factors Affecting Economic Development:

Legal Systems and Property Rights

Property rights

  • Refers to ownership and control of resources
  • Both physical and intellectual
  • Private goods tend to be efficiently produced, as producers and consumers have the right of ownership of resources.
  • Reducing property rights reduces this

Policies to promote development

  • Expand/introduce property rights
  • Encourages protection/development of resources
  • Resources can be used more efficiently
  • Increase intellecual property rights
  • Encourages innovation

Case study: Zimbabwe

  • Consequences of this included:
  • Mass unemployment
  • 200 000 farmworkers displaced
  • Reduction in production
  • No more economies of scale
  • Lack of farming experience
  • From 2000 - 2005, tobacco production fell by more than 2/3s
  • Struggled to feed own population
  • Main food for Zimbabweans, maize, reduced by 31%

Lack of property rights could lead to:

Case study: Zimbabwe

  • Exploitation of resources
  • Encourages opportunism, and both misuse and of overuse of scarce/limited resources
  • Inefficienct use of resources
  • Dormant capital
  • No incentive to add value, as they cannot attain capital gain
  • "Bread basket of Africa"
  • Commercial farms provided livelihood for 30% of paid labourforce, accounted for 40% of exports.
  • Mainly white-owned
  • From 2000, Zimbabwe allowed seisure of white-owned farmlands without compensation.
  • By 2013, every white-owned farm was confiscated or confirmed for redistribution.
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