Without property rights, no other rights are possible. Since man has to sustain his life by his own effort, the man who has no right to the product of his effort has no means to sustain his life. The man who produces while others dispose of his product is a slave.
The Virtue of Selfishness / Ayn Rand
It sure does not need a keen eye to observe and grasp the importance of property rights in economic development.
Property itself, as defined by The Law Dictionary, is “The ownership of a thing is the right of one or more persons to possess and use it to the exclusion of others. In this Code, the thing of which there may be ownership is called property.”
Kingsley Davis, the American sociologist, states that property “consists of the rights and duties of one person or group (the owner) as against all other persons and groups with respect to some scarce good. It is thus exclusive, for it sets off what is mine from what is thine; but it is also social, being rooted in custom and protected by law”.
According to the Econlib, a property right, “is the exclusive authority to determine how a resource is used, whether that resource is owned by government or by individuals”. In other words, property rights are the legal rights for individuals and other entities to use and control the benefits of the specific properties, whether tangible or intangible, that belong to them.
In his paper, Some Economics of Property Rights, Armen Alchian adds that, “property right for me means some protection against other people’s choosing against my will one of the uses of resources, said to be ‘mine.’ ”
Effects on the economy
Property rights lower transaction costs. In the absence of secure property rights in an economy, individuals cannot prove their official ownership on a certain good or service, and as a result will try to protect their rights through illegal acts such as bribery. Therefore, a society lacking efficient property rights is vulnerable to corruption.
Furthermore, a guaranteed system of rights and laws on properties, increases investments in an economy. If one loses the benefits of his investments due to lack of such rights, his incentives for further investments will probably vanish. Foreign investments will also decrease, as investors may fear that their ideas and technologies are gonna be stolen. A precise explanation of such rights among a society’s legal system will lead to higher rates of innovation, by securing the pioneers and ground-breakers against invention theft.
Nevertheless, many argue that property rights make it difficult to trace the sources of environmental damage. Moreover, some believe that these rights lead to greed for property and also destruction of human values.