A new book has been published by the Institute of Economic Affairs in London. The book, Paths to Property, is by Karol Boudreaux and Paul Dragos Aligica of the Mercatus Center, George Mason University, USA. In it Boudreaux and Aligica argue that contrary to the conventional wisdom provety in Africa will not be solved by the wealthy countries sending even more foreign aid. But the use of legislative-top-down "market solutions" will also not work. While markets and property rights are essential for prosperity these must emerge from the bottom up.
Without proper enforcement of property rights and contracts, businesses cannot raise capital and cannot conduct business except with people they know and trust intimately. In the extreme, as in Zimbabwe, all economic life can grind to a halt.
The role of government, the book argues, should be to formalise the informal systems of property rights that develop within communities. Governments in developing countries and overseas aid agencies should avoid the use of privatisation "blueprints" that ignore traditional norms and customs. The "easy option", used by agencies in developing countries, of working to a blueprint to try and recreate institutions in Africa that work the West often fails. The failures of such approaches can give the whole privatisation and property rights process, vital for sustainable economic growth, a bad name.