Ruhr Economic Papers

Ruhr Economic Papers #229

Demographic Structure and the Security of Property Rights in Developing Countries – An Empirical Exploration

by Philipp Harms and Philipp an de Meulen

RWI, 11/2010, 34 S./p., 8 Euro, ISBN 978-3-86788-261-3

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Abstract

It is often argued that countries with a high population share of children and young workers should attract large capital inflows from aging industrialized economies. However, many of these countries deter foreign investors by a high risk of creeping or outright expropriation. In this paper we explore whether the correlation between countries’ demographic structure and the perceived security of property rights reflects a causal relationship. We show that, once we control for other potential determinants of expropriation risk, the ratio of young to old workers has a positive effect on the perceived security of property rights in low-income countries. This effect is the stronger the more democratic the political system.

JEL-Classification: F21, D78, J10

Keywords: International investment; political economy; expropriation risk; demographics

Published as:

Harms, P. and P. an de Meulen (2012), Demographic Structure and the Security of Property Rights: The Role of Development and Democracy. European Journal of Political Economy 29 : 73-89.

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