Summary of JOIE article ( First View 11 May 2021) by Kara Dimitruk, Sophia Du Plessis and Stan Du Plessis, Department of Economics & LEAP, Stellenbosch University. The full article is available on the JOIE Website.
The capacity of states to raise taxes and provide property rights is seen as crucial for economic development. The determinants of fiscal capacity (the ability to raise taxes) has received more attention in the literature (Besley and Persson 2009, Johnson and Koyama 2017) and has been linked to state administration or bureaucracy (e.g., Johnson and Koyama 2014; Hup 2020). The link between administrations and legal capacity, however, is less well understood. To provide insight to the creation of legal capacity, we study the provision of de jure property rights to land to European settlers in two historical states in southern Africa, the Orange Free State (OFS) and the South African Republic (ZAR), primarily during the latter half of the nineteenth century. The provision of property rights tends to be studied from an institutional perspective (Coase 1960; North 1990; Lamoreaux 2011; Yoo and Steckel 2016; Besley and Ghatak 2010; de Soto 2000; Dye and La Croix 2019).
Quantitatively studying property rights issues in Africa, particularly in history, is challenging because of data availability. Based on the historical narrative (e.g., Liebenberg 1973, Braun 2015), we propose to use a novel measure of the provision of de jure rights to land: map accuracy. We hypothesize that states with better administrations will have more accurate maps of farm parcels and thus provide better de jure rights to land. Accurate farm boundaries in maps reflect the government’s ability to provide useful title deeds, maintain records that facilitate the transfer of ownership, and provide the public service of cartography. We use parcel shape in historical maps as measure of map accuracy. We argue that the extent to which farm parcels are represented as squares captures inaccurate specification of farm boundaries and therefore poorer quality de jure rights. A key issue is that square parcels are optimal in relatively flat areas in a metes and bounds system (Libecap and Lueck 2011; Libecap, Lueck and O’Grady 2011).
To conduct a quantitative analysis and test the hypothesis that administrative capacity influenced the accuracy of farm parcels in maps, we collect information on farm boundaries in maps created by different administrations. We digitize two sets of historical maps containing information on farm boundaries and use shapefiles provided by the current (2019) South African government. We expect farm parcels in the ZAR to be less accurate than maps of farm parcels in the OFS because of their different administrative structures. Map compilers in the OFS had better resources, standards of surveying and enforcement, training and expertise, and faced less resistance to mapping by farmers compared to map compilers in the ZAR. There were also other ‘macro’ factors at play: the OFS was relatively more wealthy and more politically stable than the ZAR for most of the period.
Using OLS, where our outcome of interest is farm parcel shape (relative squareness) and including parcel-level measures of ruggedness, our findings broadly lend support to these hypotheses. We find that parcels in maps of the ZAR, which had less administrative capacity, tend to be more square compared to farms in the OFS. Within the ZAR, areas where map-makers had incentives to map the least accurately also have the most square farms on average. Last, compared to the earliest maps in our sample (created in 1886 and 1892), parcels tend to be less square in later maps compiled by the British military (from 1900) and 2019 shapefiles. Areas in the ZAR show the largest “improvement”: farms are significantly less square in the 2019 shapefiles compared to the 1892 and the 1900 maps. The lack of a large statistical difference between the nineteenth-century maps and 1900 military maps suggests that the costs of previous administrations can limit future attempts to provide property rights (in terms of collecting information) even if the administration has resources and officials have incentives and training to accurately map property.
We provide novel evidence on how administrative capacity can influence the provision of property rights to land by using a new measure of property rights (map accuracy). Most of the work on state capacity, particularly in Africa, tends to focus on fiscal capacity (e.g., Cogneau, Dupraz, and Mesplè-Somps (2020), Gwaindepi and Siebrits (2020), and Gardner (2013)). In contrast, this paper contributes to our understanding of the development of legal capacity and its connection to government administrations. Most work on legal capacity tends to be cross-country and often relies on indices of security of property rights, such as investor protection or property rights protection (e.g., Besley and Persson 2009).
The analysis and results shed light on how administrative capacity facilitates or hinders the provision of de jureproperty rights to land for European settlers as recorded in maps. The narrative suggests it took efforts spanning 100 years from the founding of the Boer Republics to accurately survey land. According to the historical narrative, the most significant investments in this capacity came with increased demand for infrastructure. At the same time, however, it went with further dispossession and relocation of black Africans (see, for example, Braun 2015), which we have not incorporated in our analysis. Digitization of historical maps can be used to further understand this part of the process.
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