Sunday, May 24, 2009

The Role of Coffee in the Creation of Institutions in Brazil: 1830-1930

In the absence of new ideas I decided I wanted to share with my readers the abstract of my PhD dissertation at USC:

Land in Brazil is the common theme that binds together the seven chapters of this dissertation. The political and economic use of land is evaluated over one century (1830-1930) by a through study of the land and labor laws. The objective of this dissertation is to show that the historical evolution of landownership in Brazil during the Empire (1822-1889) and in Sao Paulo during the Old Republic (1890-1930) did not follow the evolutionary theory of property rights, where an increase in the price of land induces changes in the current legal system in the direction of well-defined property rights. A second objective is to show that the literature on the theme has led to a distorted view about the coffee period, especially with respect to the land and labor policies. We analyze the determinants of the first land law enacted in Brazil in 1850 to show that the legislation was mainly designed to solve problems in the labor market and not to regulate private property rights. We then address the impacts of the 1850 land law on the land, labor and credit markets. The fifth chapter covers the institutional changes in the Old Republic in Sao Paulo (1890-1930) and examines the short and long term determinants of the land and labor laws enacted by the state. We explain why these were extremely credible laws that enticed immigrants to become coffee producers. In the sixth chapter we expand the analysis to study the impacts of these legislations on the land, labor and credit markets. This work proposes two contributions. The first is to show that the concentration of land in Brazil bears no relationship with the perceived ‘failure of the 1850 land law’. The second addresses the New Institution Economics to suggest that the evolutionary theory of property rights should be amended to take into account why and how private property rights were first created in Brazil and in Sao Paulo.

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