Real estate at the service of economic development


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Scientific publication

Real estate at the service of economic development

Nicolas de Vijlder (Department of History UGent) and Koen Schoors (Department of Economics UGent and Higher School of Economics, National Research University Moscow) investigated the factors that have led to the industrialization and economic development of Flanders. They analyzed the development of the economy in most Flemish localities in the period 1830-1910. They explain the regional differences that their analysis reveals with the help of Hernando de Soto’s thesis, which identifies a well-ordered property system as an essential condition for economic development. In regions where real estate generated significant income and was used as collateral for loans, the local economy grew through investment in trade and industry. This pattern is in line with de Soto’s predictions.

The research is based on an extensive analysis of land prices and data on real estate, employment, industry and trade in 1,179 municipalities from LOKSTAT and POPPKAD.


De Vijlder, Nicolas and Koen Schoors. “Land rights, local financial development and industrial activity: evidence from Flanders (nineteenth–early twentieth century)”.  Cliometrica, 14(2020), 3: 507-50.



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.