Informal Institutional Arrangements in Credit, Land Markets and Infrastructure Delivery in Trinidad

Abstract

Informal institutional arrangements, permeating both formal and informal housing settlements, allow markets to function in developing countries. Yet their economic, social and policy impacts are largely unexamined. Insights from the new institutional economics literature are used to show the significance of informal institutional arrangements in credit, land markets and infrastructure delivery. The analysis is grounded in the experience of Trinidad and Tobago, with empirical information drawn from fieldwork research done in 1993 and 1997. Research findings show that informal institutions of cooperation (e.g. sou‐sou, CBOs) support transactions by reducing transaction costs, by lowering risk and by providing mechanisms to cope with uncertainty. They are therefore used instead of formal institutions. Policy‐makers should expect intense utilization of such locally designed institutions that use social capital in the process of land and housing market reform in developing countries. Ce sont les arrangements institutionnels informels, organisent l'habitat officiel et officieux, qui donnent aux marchés la possibilité de fonctionner dans les pays en voie de développement. Néanmoins leur impact économique, social et politique n'ont généralement pas été examinés. J'utilise des outils provenant des travaux sur l'économie neo‐institutionaliste pour démontrer la signification des arrangements institutionnels officieux pour le crédit, les marchés agraires et la distribution des infrastructures. L'analyse est basée sur l'expérience de Trinidad et Tobago, et l'information empirique provient d'une recherche de terrain faite entre 1993 et 1997. Les résultats montrent que les institutions officieuses de coopération (par exemple sou‐sou, CBOs) supportent les transactions en réduisant leurs coûts, en abaissant les risques, et en fournissant des mécanismes pour faire face à l'incertitude. Elles sont donc utilisées à la place des institutions officielles. Les politiciens peuvent s'attendre à une utilisation intense de telles institutions désignées localement et qui utilisent le capital social dans le processus de réformes du marché agraire et du logement dans les pays en voie de développement.

Land titling, perceived tenure security, and housing consolidation in the kampongs of Bandung, Indonesia

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Finance for incremental housing; current status and prospects for expansion

“…Such institutional arrangements e which are often informal e play an important role in practice (cf. Pamuk, 2000). Housing and cities are built the way they are financed.…”

Informal Urban Property Markets and Poverty Alleviation: A Conceptual Framework

“…For example, empirical evidence on the effects of unclear property rights on transaction costs is limited (Deininger and Binswanger, 1999). Thus Pamuk (2000) calls for additional empirical work from different parts of the world to document the effects of informal institutional arrangements in property markets.…”