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«Dissertation Zur Erlangung des akademischen Grades Doctor rerum agriculturarum (Dr. rer. agr) eingereicht an der Landwirtschaftlich-Gärtnerischen ...»

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365-66). Moral rules provide a solution to many problems of society, but they need no enforcement agency. They are difficult to explain as a social phenomenon because they exist in the mind of humans (Mantzavinos 2009: 13). The basic difference between social norms and moral rules is that social norms are imposed by a group of people, whereas moral rules

are derived through either religion or universal ethics and conduct (Baland and Platteau 1996:

122-24). Social norms are also different in different social setups and are established through the interaction and behavior of the people. Sometimes, these informal institutions are stronger than the administrative powers and can influence formal institutions.

Formal institution (rules): Institutions that are acknowledged by the government are called

formal rules. They are dependent on informal institutions (Black 1960, cited in Ostrom 2005:

830). These institutions are also of two types: 1) outcome-oriented changes, which are exogenous changes, develop via a long chain of actors from a lengthy process of their evaluation to an imposition, 2) spontaneous changes, which are normally endogenous, spontaneously emerge by repeating interactions between actors (Pejovich 1997: 29-31). New

institutional economists suffer from the problem of endogeneity and exogeneity (Nye 2008:

72). Supremacy of one or the other form of institution depends on their ruling elites.

Exogenous changes always create opportunities for the rent-seeking coalitions, and endogenous changes provide benefits for some private elites (Pejovich 1997: 31), but it cannot be denied that institutions are necessary for the development of the economy and are shaped by human behavior (Nye 2008: 73).

“Institutions can be defined as a set of working rules that are used to be determined who are eligible to take decisions in the same arena, what actions are allowed or constrained, what aggregation rules will be used, what procedures must be followed, what information must or must not be provided, and what pay offs will be assigned to individuals dependent on their actions. All rules contain prescriptions that forbid, permit or require some action or outcome” (Ostrom 1990: 51). Working rules are those where individuals make choices about the actions that they will take for their expected action (ibid), for example, rules that are helpful for a landowner who wants to choose to maximize his utility in the case of land use. These social institutions are a set of rules that shape social interactions in particular ways. These rules tell us about the expected attitude of the people in a particular situation and can be recognized by members of the relevant groups in order to produce equilibrium outcomes (Knight 1992: 54).

The definitions of institution can be explained as the people’s expected attitude in a situation.

This can be defined as the action of the actors who are eligible to take decisions within that action situation for an equilibrium outcome. For example, with the help of institutions, landowners can make better decisions about the division of the land among the different options. Formal laws are also made according to the situation of the society. In Islamic societies, formal rules are based on Shari’a3, which guides Muslims in all aspects of their life, including family, property, and other financially related matters (Vriens 2009: 1).

Formal and informal institutions are generally accepted to coincide in any society, e.g., the changes occur in both formal and informal institutions. These changes are processed slowly for informal compared with formal institutions (Williamson 2000: 598; North 1990: 95).

Informal institutions usually change because of existing changes in formal institutions (Pejovich 1999), or as the status-quo conditions that sustain these changes (Knight 1992). In case of countries with underdeveloped formal institutions, the influence of informal institutions is very strong (Eggertsson 1994: 3). The way that informal institutions operate in a specific domain of human activity systems can be understood by examining the way that established and maintained social norms influence human actions (Beyene 2008: 23). Formal and informal institutions are known to have some common attributes. 1) Both institutions change with time, although the conditions may be different, and factors are not fully defined under which these changes occurred. This can also be understood as a result of the interactions of the different actors and factors (North 1990: 58). 2) Institutions are often invisible and share concepts in the minds of the people; their effect can only be measured through policies (Ostrom 1999: 5).

In the case of Islamic countries such as Pakistan, most of the formal laws are based on Islamic Shari’a Law, which is primarily derived from Quran (The Holy Book of Muslims) and Sunna, the sayings, acts, and teaching of the Prophet Mohammad (Pease Be upon Him).

However, with the passage of time and the emergence of new issues, a development of consensus among Muslim community led to an additional source of Shari’a Law (Robinson 2007: 1). The process of such evolution is known as Ijtihad. Currently, inheritance law is purely derived from Shari’a Law, and other laws have developed with some suitable changes necessary for a Muslim society. Together with this formal setup, different regions have their own traditions and culture, and these informal institutions are involved deeply in every matter of the people of that region.





Shari’a is an Arabic word, which means path.

3.2.3 Property Rights According to Bromley (1991: 94) “A right is the capacity to call upon the collective to stand behind one’s claimed to a benefit stream (that is to one’s property)”. It is essential for every citizen in the society to fulfill his or her responsibilities (Abdin 2008: 1), but a property right cannot be taken as unbiased agreement to manage something. By assuming rights, an individual can expect from the state to defend his interests in a particular outcome (Sjaastad and Bromley 2000: 3), and in order to avoid undesirable outcomes, the state grants some protection mechanisms of particular relevance for the assurance of these rights (Deininger and Feder 2001: 4).

Property means a belonging over which a person can claim the right of ownership (Hann 1998: 4). The author explains people’s behavior in different cultural environments with respect to the ownership of land. According to Hann (1998), property relationships explain the social relationships that exist between different people and societies (ibid: 5). Generally, the existence of property is possible when it is effectively rendered through a complete procedure of appropriation (Godelier 1986: 81). All societies’ have different property relationships in order to deal with the problems of individuals, and most of these problems are related to the sense of possession. Property rights try to solve these problems through a particular specification of rights.

Property rights can define the relation between individuals established on the basis of insufficient goods and their use. Individuals must take notice of the norms of behavior or the cost of violation when they interact with each other. Property rights are not defined as a tie between the individual and an object but can be explicated as the relationship between individuals for the use of objects, which is also called ownership, e.g., property rights for land use means the access of an individual to land with respect to other society members (Pejovich 1997: 57). The right of ownership has three main components, 1) exclusivity, 4 2) transferability, 5 3) constitutional guarantees of ownership6 (ibid: 58).

Exclusivity of ownership: the owner has the right to decide the use of a resource, assess to resource costs and benefits of a resource. A restricted right involves some limitations imposed by law, e.g., price control or keeping the boundaries of one’s house two feet inside the property line (Pejovich 1997: 58).

Transferability of ownership: the owner has the right to transfer his property to others on common terms and conditions. Through this right, the owner can receive the value (whole or as per condition of the agreement) against his asset (ibid: 59).

Protecting the private property by rule passing by majority (ibid: 60) Property rights are societal tools and are helpful for individuals, maintaining hopes in their dealings with other members of society. With the approval of other members of society, the owner of property rights can take actions of his own volition. He expects that the community will stop others interfering with those actions to which he has a right (Demsetz 1967: 347). In this way, property rights protect one’s action regarding one's property. The individual feels secure, if property rights are properly practiced in the society.

Property rights have been considered the most important and effective means to create, keep, and protect scarce resources (Roberts and Milgrom 1992). They are the rights of the individuals to use property, to generate income from these scarce resources (mainly land), to transfer this land between others, and to change its form and substance (De Alessi 1990: 47, Furubotn and Richter 2000). According to a report from FAO (2002: 26) these rights are called the use rights, control rights, and transfer rights. Use rights are mainly those rights through which a person can occupy, use, develop, or sometimes exploit the resources.

Because of the control rights, an individual has a power to decide on the usage or alienation of his asset for income generation. Transfer rights are supportive when the right holder wants to sell, mortgage, or lease the land. In the case of private property rights, all these rights are fully defined, earmarked, and implemented.

Property rights are social institutions defined by the sanctions applied to the individuals with respect to a particular resource. These resources may or may not be moveable.

Ownership rights mean the control of the land holder over the land in the case of his physical access to the site and his authority for all sorts of decisions of land uses. In the case of private property, different rights are involved, e.g., the right to exclude non-owners from access, the right to appropriate the stream of rents from the use of and investments in the resource, and the right to sell or otherwise transfer the resource to others. Property right institutions range from formal and informal institutions regarding the use of property. These institutions have a strong influence on decision making, economic behavior, and performance (Libecap 1989: 1) and affect the economy in two different ways: 1) by assigning ownership to the resource with regard to who will bear the cost and who benefits and 2) by allotting the decision-making authority (ibid:10). Under conditions of full private property, an asset owner is entitled to use, rent, or sell the property. In the case of a sale, a collection of property rights is then transferred from one person to another. As a consequence, the value of any private property depends, ceteris paribus, on the bundle of property rights that can be conveyed in the transaction (Furubotn and Richter 2000).

Property rights regularized the relationships between individual with respect to things, goods, and values. An individual can exert some power over an asset to consume, to obtain income from a property, and to alienate it through these rights (Verdery 2003: 18, Barzel 1989: 2). These rights indicate different relationships such as a relation to use: exclusive ownership means sole ownership or, in other words, the power or authority related to the resource, and obligation means one’s act of binding oneself by a social, legal, or moral tie.

Verdery (2003: 172) places emphasis on values and has discussed the values related to ownership and dignity.

Operational level property rights are dealt with by following types of rights: 1) the right of access means a person has a right to enter a physically defined area and to enjoy its benefits,



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