June, 2010

Land and Rebellion: Property Rights and Contracting in Andean Peru

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This paper explores the mechanism by which a change in the relative price of an export commodity can act as an economic force behind a pattern of rebellions in the Peruvian Andes between the 1880s and the 1960s. This research suggests peasants will revolt when there is a latent motivation to renegotiate contracts when transaction costs are lowered. Further, insecure property rights exacerbate conflict. Two cases in recent Peruvian history, wool in the 1880s to 1930s, and coffee after WWII, are presented and analyzed within a framework of the theory of property rights and the economics of conflict.

The first chapter reviews the theoretical background that undergirds this research. Chapter 2 is an extensive history of the property rights structure in Andean Peru from the Inca Empire to the present day, whereas chapters 3 and 4 are parallel analyses of a change in the relative price of wool and coffee and the resulting rebellions that followed. Chapter 5 summarizes the relevant policy lessons and concludes. A glossary can be found at the end of this paper with translatins of terms in Spanish and Quechua used extensively throughout this paper.