Property Rights

Property Rights
Presented by:
Md. Mehedul Karim
Roll: 2022-20-18
Batch: MDS-20
Property Right
• The theory of property rights is a subsection of New
Institutional Economics and studies the action and disposal
rights for goods.
• The basic assumption of the theory is, that an efficient
result can be achieved regardless of who is the owner of a
resource but not without an owner or with more legal
owners.
The Property Rights Theory
• The Property Rights Theory focuses on the absolute rights (green).
It attempts to answer in which way the absolute rights should be
distributed to solve negative externalities and thereby increase
efficiency. For the ideal distribution three key points are important:
• Universality: All scarce resources should belong to someone.
This right must be clarified unambiguously and guaranteed by the
state. In the case of joint ownership the criteria of Universality
would be complied, but not those of Exclusivity.
• Exclusivity: All property rights should be allocated exclusive so
that one owner can exclude others from the good. This increases
the interest for sustainability.
• Transferability: Property rights should be transferable. Thereby a
bad producer can transfer his property to a more talented one. The
owner here has a strong incentive for the efficient use of a
resource.
Property Rights and Institutions
• Property rights lay the foundation for economic and social
interactions, defining how assets are controlled, used, and
transferred within a society.
• North's institutional economics framework underscores how
institutions, formal and informal, influence the allocation of
property rights and consequently impact economic behavior
and development (North, 1990).
• Coase's transaction cost theory highlights how institutions
reduce the costs associated with property rights exchange,
affecting the efficiency of economic transactions (Coase,
1960).
Property Rights, Power, and Political
Economy
• The power elite theory, as discussed by C. Wright
Mills, argues that a small group holds
disproportionate control over property rights and
institutions, shaping economic and political
outcomes (Mills, 1956).
• Conversely, public choice theory, developed by James
Buchanan, suggests that individual actors pursuing
self-interest exert influence over property rights
through political processes (Buchanan, 1967).
New Institutional Economics and
Property Rights
• New Institutional Economics, represented by Oliver
Williamson and Elinor Ostrom, examines how
institutions mitigate transaction costs, including
those related to property rights.
• Ostrom's work on common-pool resource
management underscores the importance of well-
defined property rights within community-based
institutions to prevent resource overuse (Ostrom,
1990).
Rent-Seeking and Property Rights:
• Rent-seeking can lead to distortions in
property rights arrangements and resource
allocation, impacting economic growth and
societal welfare (Tullock, 1967; Krueger, 1974)
Here are a Few Prominent Theories
• Institutional Economics
➢ This theory emphasizes that property rights and
institutions are crucial determinants of economic
outcomes.
• Resource Curse Theory
➢ The resource curse theory suggests that countries rich in
valuable natural resources may paradoxically experience
slower economic growth and development due to poor
management of property rights and institutions.
• Rent-seeking Theory
➢ Rent-seeking theory, associated with economists like Gordon
Tullock and Anne Krueger, explores how individuals or groups
seek to gain economic benefits by influencing public policies
or institutions.
• Power Elite Theory
➢ The power elite theory, proposed by sociologists C. Wright
Mills, examines the concentration of power in a small,
interconnected group at the top of society.
• Neo-Marxist Theory
➢ Neo-Marxist theories, building upon the works of Karl
Marx, emphasize the role of class struggle and power
dynamics in shaping property rights and institutions .
• New Institutional Economics:
➢ New Institutional Economics, which encompasses the
works of Ronald Coase, Oliver Williamson, and others,
focuses on how institutions, including property rights,
reduce transaction costs and facilitate economic
exchange.
• Public Choice Theory:
➢ Public choice theory, associated with scholars like James
Buchanan, examines how individuals' self-interested
behaviour influences political decision-making
Critiques in the Context of
Bangladesh:
• New Institutional Economics:
➢ New Institutional Economics emphasizes how institutions
reduce transaction costs and facilitate economic
exchange. In Bangladesh, informal institutions and social
norms can play a significant role alongside formal
institutions.
✓ State Capacity
✓ Cultural Factors
Bangladesh:
• Resource Curse Theory
➢ While Bangladesh doesn't have vast natural resource wealth
like oil or minerals, it does possess valuable resources such as
natural gas and textiles. The resource curse theory may not
fully explain the country's economic challenges.
✓ Limited Resource Wealth

✓ Textile Industry Success
✓ Diverse Economic Challenges
Bangladesh:
• Rent-Seeking Theory:
• Rent-Seeking Theory's focus on individuals seeking to
influence policies for personal gain might not fully
capture the motivations behind political activities in
Bangladesh.
• While rent-seeking behaviour is present, it's
intertwined with broader societal and ideological goals.
• Political parties often mobilize supporters around
larger social and political issues, suggesting that the
pursuit of rents is only one aspect of political
engagement
Bangladesh:
• Power Elite Theory
➢ The power elite theory suggests that a small group controls
and influences property rights and institutions. In Bangladesh,
power dynamics are complex, involving a mix of political
parties, business conglomerates, and military influences.
✓ Complex Power Dynamics

✓ Changing Economic Landscape
✓ Competitive Politics
Bangladesh:
• Neo-Marxist Theory
➢ Neo-Marxist theories emphasize class struggle and the
concentration of property ownership. In the case of
Bangladesh, land ownership is a critical issue.
✓ Heterogeneous Property Distribution

✓ Urbanization and New Opportunities
✓ Social Mobility
Bangladesh:
• Public Choice Theory
➢ Public Choice Theory highlights individuals' self-interested
behaviour in influencing political decisions, it might
oversimplify the complex political landscape of Bangladesh.
✓ Power Dynamics
✓ Political Activism
Property Rights and Bangladesh
• Article 42 (1)
• “ Subject to any restrictions imposed by law,
every citizen shall have the right to acquire,
hold, transfer or otherwise dispose of
property, and no property shall be
compulsorily acquired, nationalized or
requisitioned save by authority of law.”
The property laws in Bangladesh
(1875 to Present)
• THE LAND SURVEY ACT, 1875
➢ The Survey Act of 1875 mainly determined the boundary of a
village.
• THE RENT ASSESSMENT ACT OF 1879
➢ This allowed the settlement officer to verify the increase in rent for
occupancy.
• THE BENGALTENANCY ACT, 1885
• This law made intricate provisions about the ownership, rights, and
liabilities of zamindars, talukdars, landlords, Mokarrari raiyats
(raiyats giving fixed rents), residence raiyats, settled raiyats, non-
occupancy raiyats, etc.
•
• THE TRANSFER OF PROPERTY ACT, 1882
• The Act regulates the exchange of property from an
individual to another through sale, contract, mortgage,
lease, deal, exchange (i.e., exchanging the property of land
with crops), or donation.
• REGISTRATION ACT, 1908
• The purpose of the Act is to consolidate the related
registration law and provide the registration procedure.
• THE BENGAL NON-AGRICULTURAL TENANCY (TEMPORARY

PROVISION) ACT 1940
• THE NON-AGRICULTURAL TENANCY ACT, 1949
• THE STATE ACQUISITION AND TENANCY ACT, 1950
➢ The East Bengal State Acquisition And Tenancy Act of
1950 was legislated by The Land Revenue Commission’s
recommendation. The act was enacted to acquire by the
government all rent receiving interests.
• HATS AND BAZAARS (ESTABLISHMENT AND ACQUISITION)
ORDINANCE 1959
➢ Hats and Bazaars (Establishment and Acquisition) Ordinance
1959 procured the establishments mentioned above after the
final publication of compensation appraisal rolls and
reimbursement payment by publication notice in the official
gazette.
• THE WAQF ORDINANCE 1962
• THE LAND LAW DEVELOPMENT TAX ORDINANCE, 1976;
ORDINANCE NO. XLII OF 1976
➢ This Ordinance primarily provides the levy of a property’s
development tax. The Act extends to the entirety of
Bangladesh, excluding the Chittagong Hill Tracts.
• THE LAND REFORMS ORDINANCE, 1984
➢ This Ordinance reformed the law related to land tenure,
landholding, and land transfer to improve production and secure a
better relationship between landowners and Bargadars (landowners
renting lands for agricultural and other commercial purposes).
• THE LAND REFORM BOARD ORDINANCE, 1989
➢ The Land Reforms Board was established at the national level under
the Land Reforms Board Act 1989. The board consists of a
chairperson and two additional members
• EMERGENCY REQUISITION OF PROPERTY ACT 1989
➢ The Act provided the requisition of property that encountered
any emergency or disaster produced by a flood, dilution, etc.
• THE LAND APPEAL BOARD ORDINANCE, 1989
➢ The government established The Land Appeal Board under
section 4 of the Land Appeal Board Act 1989. This ordinance
documents land up to date (mutation).
• THE RESTORATION OF VESTED PROPERTIES ACT, 2001
➢ This law had a primary aim at reclaiming the properties of
Hindu minorities and Indian nationals that depended on the
government under Bangladesh (Vesting of Property Assets)
Order, 1972
• REAL ESTATE DEVELOPMENT AND MANAGEMENT ACT,
2010
➢ The Real Estate Development and Management Act 2010 is
the governing law of the property laws in Bangladesh. It
legislates the buying, selling, and transferring of Real Estate in
Bangladesh.
Some real-life examples and news
references in the context of
Bangladesh that illustrate the
relationship between property rights,
institutions, power, and political
economy:
1. Property Rights and Economic Growth
2. Institutions and Property Rights
Enforcement
3. Power Dynamics and Land Distribution
4. Rent-Seeking Behaviour and Corruption
5. New Institutional Economics and Informal
Institutions
6. Property Rights and Social Equity
7. Political Mobilization and Property Rights
Advocacy
References
1. Douglass North: "Institutions, Institutional Change and Economic
Performance" (1990)
2. Ronald Coase: "The Problem of Social Cost" (1960)
3. C. Wriht Mills: "The Power Elite" (1956)
4. James Buchanan: "The Calculus of Consent: Logical Foundations
of Constitutional Democracy" (1967, with Gordon Tullock)
5. Elinor Ostrom: "Governing the Commons: The Evolution of
Institutions for Collective Action" (1990)
6. Oliver Williamson: "The New Institutional Economics: Taking
Stock, Looking Ahead" (2000)
7. Gordon Tullock: "The Welfare Costs of Tariffs, Monopolies, and
Theft" (1967, with James Buchanan)
8. Anne Krueger: "The Political Economy of the Rent-Seeking
Society" (1974
Thank You

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Property Rights

✓ Limited Resource Wealth

✓ Complex Power Dynamics

✓ Heterogeneous Property Distribution

• THE BENGAL NON-AGRICULTURAL TENANCY (TEMPORARY

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