We address a debate over the effects of private versus customary property rights on external investment. Despite political economists' claims that external investors favor private property rights, other experts argue that customary systems enable large-scale land grabs. We organize these competing claims, highlighting trade-offs due to differences in legibility versus the ability to displace existing landholders under both systems. We study a natural experiment in Liberia, where law codifies parallel private and customary property rights systems. We use this institutional boundary and difference-in-differences methods to isolate differential changes in external investment under the different property rights systems following the global food crisis of 2007-08. We find a larger increase in land clearing where private property rights prevailed, with such clearing related to more concession activity. Qualitative study of a palm oil concession reveals challenges external investors confront when navigating customary systems.
- Key Words Land investment
- customary institutions
- property rights
ASJC Scopus subject areas
- Sociology and Political Science
- Political Science and International Relations
- Organizational Behavior and Human Resource Management