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Land rights, local financial development and industrial activity: evidence from Flanders (nineteenth–early twentieth century)

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Abstract

In this paper, we investigate the hypothesis that the economic divergence across Flemish localities between 1830 and 1910 is explained by the theory of Hernando de Soto. We hypothesize that the uniform land rights installed after the French revolution provided borrowers with an attractive form of collateral. Conditional on the presence of local financial development provided by a new government-owned bank this eased access to external finance and fostered industrial and commercial economic activity. Using primary historical data of about 1179 localities in Flanders, we find that the variation in the local value of land (collateral) and the variation in local financial development jointly explain a substantial amount of the variation in non-agricultural employment accumulated between 1830 and 1910. By 1910, industrial and commercial economic activity was more developed in localities where both early (1846) rural land prices were high and early (1880) local financial development was more pronounced, which is in line with the ‘de Soto’ hypothesis.

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Notes

  1. See Table 1 for an overview of the used variables, as well as their respective sources. For an overview of the literature concerning (historical) trade, agricultural and manufacturing censuses, see: De algemene tellingen van de bevolking, de handel, de nijverheid en de landbouw sedert 1846 in België gehouden. In: Algemene volks-, nijverheids-en handelstelling op 31 December 1947. Deel I. Brussel, 1949, pp. 41–44; G. De Brabander. De regionaal-sectoriële verdeling van de economische activiteit in België (1846-1979): een kritische studie van het bronnenmateriaal. Leuven, 1984, pp. 145–156. (Interuniversitair Centrum voor Hedendaagse Geschiedenis . Bijdragen 97) N. Bracke, Bronnen voor de industriële geschiedenis: gids voor Oost-Vlaanderen (1750–1945). Gent, 2000, pp. 194–196; J. Buntinx, Nationaal Instituut voor de Statistiek: inventaris van het archief van de Economische en Sociale Telling van 1937 en vergelijkend onderzoek met de gepubliceerde resultaten. Brussel, 2003, 189 p. (Algemeen Rijksarchief. Inventarissen 345); P. Olyslager, De localiseering der Belgische nijverheid. Antwerpen, 1947, 285 p. (Reeks van de School voor Economische Wetenschappen 32).

  2. Respectively the industrial censuses of 1880 and 1846 and the trade census of 1830.

  3. Source: Brussel, BNP Paribas Fortis Historical Centre, Archives de la Caisse Generale D’epargne et de Retraite (CGER) 1850–2000, no. 8–12, Rapports Annuels CGER.

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Authors and Affiliations

  1. Universiteit Gent, Ghent, Belgium

    Nicolas Devijlder & Koen Schoors

  2. National Research University Higher School of Economics, Moscow, Russia

    Koen Schoors

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  1. Nicolas Devijlder
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Data appendix

Data appendix

Variable name

Variable

Operationalization

Sourcea

Employment (YE1)

Employment in trade and manufacturing enterprises per capita in 1910

Continuous variable divided by the locality’s population in 1910

(1)

Employment (YE2)

Employment in trade enterprises per capita in 1910

Continuous variable divided by the locality’s population in 1910

(1)

Employment (YE3)

Employment in manufacturing enterprises per capita in 1910

Continuous variable divided by the locality’s population in 1910

(1)

Land price

Average price for one hectare of freehold arable land in 1846

Original values divided by 1000, continuous variable per locality

(1)

Financial development measure 1

Number of ASLK accounts in the locality per capita in 1880

Continuous variable divided by the locality’s population in 1880

(2)

Financial development measure 2

Amount of ASLK savings per capita of the locality in 1880

Continuous variable divided by the locality’s population *1000 in 1880

(2)

Financial development measure 3

Amount of Raffeisenkassen credits per capita of the locality in 1910

Continuous variable divided by the locality’s population *1000 in 1910

(2)

Neighboring financial development (measures 1, 2 or 3)

Variable that measures the financial development in neighboring localities

Dummy variable equals 1 if there is an ASLK office (Raffeisenkas) in a neighboring locality

(2)

Land price

Average market price for one hectare of freehold arable land in 1846

Original values divided by 1000, continuous variable per locality

(1)

House price

Average cadastral value of houses in the locality in 1865 (first data point)

Continuous variable, from individual cadastral values of houses in locality in 1865

(1)

Surface

Surface area of each locality

Continuous variable in hectares.

(1)

Campine

Localities in the Campine regions, with typical poor soil quality

Dummy = 1 if locality in Campine region

(1)

Loam

Localities that fall in fertile loam soil quality region

Dummy = 1 if locality in loam region

(1)

Polder

Localities that fall in the very fertile soil quality polder regions

Dummy = 1 if locality in polder region

(1)

Sandy_loam

Localities that fall in the moderately fertile sandy loam soil quality region

Dummy = 1 if locality in sandy_loam region

(1)

Waterway access 1896

Locality access to a navigable waterway in 1896 (first data point)

Dummy = 1 if locality has waterway access in 1896

(1)

Neighborhood railway station 1910

Locality access to neighborhood railway system through station in 1910 (first data point)

Dummy = 1 if locality has neighborhood railway station in 1910

(1)

Railway station 1896

Locality access to railway system through station in 1896 (first data point)

Dummy = 1 if locality has neighborhood railway station in 1896

(1)

Fallow

Acreage of fallow land in 1846 as share of farming acreage

Continuous share, per locality

(1)

Hay

Acreage of hay land in 1846 as share of farming acreage

Continuous share, per locality

(1)

Grassland

Acreage of grassland in 1846 as share of farming acreage

Continuous share, per locality

(1)

Garden

Acreage of gardens in 1846 as share of farming acreage

Continuous share, per locality

(1)

Desolate_heath

Acreage of desolate and heath land in 1846 as share of farming acreage

Continuous share, per locality

(1)

Common

Acreage of communal land in 1846 as share of total locality surface

Continuous share, per locality

(1)

Log (farming acreage)

Log of the number of hectares used for farming in the locality in 1846

Continuous variable, per locality

Own calculations using: (1)

HHI46

Herfindahl–Hirschman index of land ownership concentration of the locality in 1846, from individual cadaster data

HHI = s21  + s22  + s23  +···+ s2n (with si = share of land plot i in total acreage)

Own calculations using: (1)

Xcoord

Longitude

Continuous variable, per locality

(1)

Ycoord

Latitude

Continuous variable, per locality

(1)

  1. a(1) Source Historical database of local statistics—LOKSTAT, Ghent University, History Department supervised by Eric Vanhaute and Sven Vrielinck
  2. (2) Source Brussel, BNP Paribas Fortis Historical Centre, Archives de la Caisse Generale D’Epargne et de Retraite (CGER) 1850–2000, nos. 8–12, Rapports Annuels CGER 1965–1911

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Devijlder, N., Schoors, K. Land rights, local financial development and industrial activity: evidence from Flanders (nineteenth–early twentieth century). Cliometrica 14, 507–550 (2020). https://doi.org/10.1007/s11698-019-00196-9

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