Law and Development

2011_April_13

Introduction
As the New Institutional Economy (e.g. North and Coase) indicated, law plays animportant role in economic development. Though law is a small (but very important) part ofinstitutions that control (irrational!) human behavior. the relation between law and social progress
have attracted many scholars for long time.
Especially, when the development of newly independent countries became an important
issue after the World War II, the role of law in economic and social development became acharming issue for law scholars, and international cooperation for law reform became the boom.
This is called the "Law and Development movement (LDM)." The LDM mainly done by US law
scholars focusing on Latin American countries had decreased without significant result. Then, aidbusiness have been more economic oriented (neo-liberal market approach), or law was consideredas paraphrased version of politics (dependency approach).
But in 1990s, along the transition of socialist countries to market economy, the LDM
revives as the popular issue of the international development cooperation. This, specially, is called"New Law and Development Movement (NLDM)."
In law and development projects, the "Rule of Law" (RoL) is the keyword. It is consideredthat contries with good RoL will achieve good development. The RoL is a infrastructure for
economic development. For example:"Economists became fascinated by the rule of law after the crumbling of the "Washington
consensus". This consensus, which was economic orthodoxy in the 1980s, held that thebest way for countries to grow was to "get the policies right"-on, for example, budgets
and exchange rates. But the Asian crisis of 1997-98 shook economists' confidence thatthey knew which policies were, in fact, right. This drove them to re-examine what hadgone wrong. The answer, they concluded, was the institutional setting of policymaking,especially the rule of law. If the rules of the game were a mess, they reasoned, no amountof tinkering with macroeconomic policy would produce the desired results. .......
Partly because of this [empirical studies], and also because the rule of law is desirable forits own sake, governments and aid agencies began splurging money on rule-of-law
reforms, such as training judges, reforming prisons and setting up prosecutors' offices.
Such reforms had begun in Latin America in the mid-1980s. Now they became
universal." (Website of Economist Magazine, Mar 13th 2008,
http://www.economist.com/node/10849115)

According Prof. Santos, "TheWorld Bank estimates to have supported 330 "rule of law"
projects dealing with legal and judicial reformin over 100 countries. ... . It has spent about $3.8
billion since 1993." (Trubek and Santos eds., The New Law and Economic Development: A CriticalAppraisal, 2006, p.253)
World bank strategically uses the RoL either in narrow and in broad definitions. TheWorld governance index (WGI), one of key data for loans and investments, covers six broaddimensions:・ Voice and Accountability: the extent to which a country's citizens are able toparticipate in selecting their government, as well as freedom of expression, association,and the press.
・ Political Stability and Absence of Violence: the likelihood that the government will
be destabilized by unconstitutional or violent means, including terrorism.
・ Government Effectiveness: the quality of public services, the capacity of the civil
service and its independence from political pressures; the quality of policy formulation
・ Regulatory Quality: the ability of the government to provide sound policies andregulations that enable and promote private sector development
・ Rule of Law: the extent to which agents have confidence in and abide by the rules ofsociety, including the quality of property rights, the police, and the courts, as well as therisk of crime.
・ Control of Corruption: the extent to which public power is exercised for private gain,
including both petty and grand forms of corruption, as well as elite "capture" of the state
Not only economic development, the RoL is considered as the key for democracy, world
fair trade, enviromentaly balanced life style as well as freedom from famine. Everyone talk about
the RoL as if the RoL is panacea for all challenges our world facing.
However, for example, the World Bank itself confessed in its press release in 2007 (NewsRelease No. 2007/58/DEC):"Where there is commitment to reform, improvements in governance can and do occur.
Over the past decade from 1998-2008, countries in all regions have shown substantial
improvements in governance, even if at times starting from a very low level. Examples
include Ghana, Niger, and Peru in Voice and Accountability; Algeria, Angola and Sierra
Leone in Political Stability and Absence of Violence/Terrorism; China, Colombia, andRwanda in Government Effectiveness; the Democratic Republic of Congo, Georgia andLibya in Regulatory Quality; Latvia, Liberia and Rwanda in Rule of Law; and Indonesia,Liberia and Serbia in Control of Corruption.
On average the quality of governance around the world has not improved much over thepast decade, despite some of the individual country improvements noted above.
Coinciding with countries that have done well, a similar number have experienced
deteriorations in several governance dimensions, including Zimbabwe, Cote d'Ivoire,Belarus, Eritrea and Venezuela. In many other countries, no significant change in either
direction is yet apparent in recent years."Still, we have so many disagreements about the RoL that the global "rule of law" projects
are conflicting with others everywhere. Thus, we needs analytical stance about, say:
Whether the RoL is the only solution to achieve desired goals?
What elements are composing the RoL?
What mechanism is working when the RoL co-relates with development?
What preconditions are necessary to have the good RoL in a country?
For whom the RoL is beneficial?
Whether the RoL is transplantable from one place to another?
Is the RoL global?
A scholary effort to examine those disagreements:
World Justice Forum in Vienna in July 2008
Proceedings:(1) Global perspectives on the Rule of Law - exploring fundational questions and debateson the rule of law, with special emphasis on the relationship between the rule of law andeconomic development.
(2) Marginalized Communities and Access to Justice - focusing on access to justice andthe particular challenges that traditionally marginalized social groups face in attempting toachieve justice through formal and informal justice systems.
In this semester, we read first one to understand the theoretical aspect of the RoL in relation toeconomic, political and social development.