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      The Cost of Property Rights: Establishing Institutions on the Philippine Frontier Under American Rule, 1898-1918
      25 Sep 2008Working Paper Summaries

      The Cost of Property Rights: Establishing Institutions on the Philippine Frontier Under American Rule, 1898-1918

      by Lakshmi Iyer and Noel Maurer
      Economists generally agree that a system of transparent and secure property rights is beneficial for growth and development. A large literature emphasizes the role of property rights in spurring long-term investments, improving productivity, changing labor allocations, and increasing access to formal sources of credit. This paper describes U.S. attempts to implement property rights reforms in the Philippines in the early twentieth century. Iyer and Maurer document that, two decades after the arrival of the Americans, property rights in the Philippines had become unambiguously less secure, and that political and budgetary constraints played a large role in inhibiting the progress of reforms. Key concepts include:
      • Lacking sufficient revenue and unwilling to pay certain political costs, the insular government settled for a very slow pace of progress in property rights reforms.
      • As a result, the Philippine agricultural frontier expanded in a chaotic and unordered manner, which may have contributed to the agricultural unrest of the post-independence era.
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      Author Abstract

      We examine three reforms to property rights introduced by the United States in the Philippines in the early 20th century: the redistribution of large estates to their tenants, the creation of a system of secure land titles, and a homestead program to encourage cultivation of public lands. During the first phase of American occupation (1898-1918), we find that the progress of implementing these reforms was very slow. As a consequence, tenure insecurity increased over this period, and the distribution of farm sizes remained extremely unequal. We identify two primary causes for the slow progress of reform: first, the high cost of implementing these programs was a major factor in reducing take-up. On the other hand, the government was reluctant to evict delinquent or informal cultivators, especially on public lands. This reduced the costs of tenure insecurity. Political constraints prevented the government from subsidizing land reforms to a greater degree.

      Paper Information

      • Full Working Paper Text
      • Working Paper Publication Date: August 2008, revised April 2009
      • HBS Working Paper Number: 09-023
      • Faculty Unit(s): Business, Government and International Economy
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