The Political Economy Land Privatization in Argentina and Australia, 1810-1850
Abstract: This paper compares public land disposal and the emergence of property-rights on the frontier in the first half of the nineteenth century in the Province of Buenos Aires, Argentina, and New South Wales, Australia. The most prominent theory of the emergence of property rights on frontiers proposes a natural progression from open access, to de facto property rights from informal claims, to de jure rights, which evolve from growing political demands of settlers and entrants. We argue that this approach ignores the political supply side when, according to record, governments of these settlement economies often claim frontier land as public land to meet revenue demands. We show that a revenue-maximizing government, under certain conditions, when faced with competing claims of squatters, will not enforce its claim to public land, allowing squatters effectively to take it over. The government’s decision depends on the costs of enforcement, the opportunity costs of squatters, and the threat of violence on the frontier, especially from indigenous peoples who oppose settlement. The contrast between Argentina and Australia confirms the main predictions of the model and explains why the progression from de facto to de jure property rights is born out in the process of frontier settlement in the colony of New South Wales but not in the province of Buenos Aires, where settlement of frontier land was achieved by an original specification of de jure property rights.