1 The Role of Justice in Development: Empirical Evidence 8 legal reform in India, LilienfeldˆaToal, Mookherjee, and Visaria (2012) show that faced with inelastic credit supply, stronger enforcement of lender rights reduces credit access to small borrowers in favor of the wealthy.

# **Justice E↵ects on Entrepreneurship and Business Environments**

Empirical evidence demonstrates the impact of justice on entrepreneurship and healthier business environments. Lichand and Soares (2011) explore the creation of Special Civil Tribunals in the Brazilian state of S ̃ao Paulo during the 1990s. These tribunals increased the geographic presence of the justice system, simplified judicial procedures, and increased the speed of adjudication of disputes. According to the authors, these new courts achieved considerable success and improved the business climate throughout the country. Microenterprises, creditors and the general population rushed to these new courts, leading to a greater resolution of contractual disputes, a better business environment, and greater recovery of defaulted loans by creditors. The results find that these special civil tribunals led to increased entrepreneurship among individuals with higher levels of education. The authors estimate that, as a consequence of the creation of Special Civil Tribunals, the number of people starting new businesses in Brazil increased by 10% in just 10 years.

judicial performance (measured in time-to-disposition and unpredictability of cases) stunts economic and social growth, resulting in lower per capita income, higher poverty rates, fewer private economic activities, and poorer public infrastructure. Jurisdictions with lower judicial performance also experienced higher crime rates and more industrial riots.

Similar effects have been recorded in two empirical studies in India and Pakistan. In 2002, India modernized its antiquated Code of Civil Procedure. Chemin (2012) shows that simple changes, such as limiting adjournments, imposing time limits, and encouraging out-of-court settlements, decreased the time it took to resolve cases and, in doing so, led to a number of positive changes in the economic sphere, including greater investments in firms. Commercial firms that benefited increased their investment by 7.5% . The author also finds that slower judiciaries are associated with poorer outputs in manufacturing and agricultural trade.

A different study by the same author evaluates an innovative delay reduction program implemented in Pakistan (Chemin, 2009). In this “Access to Justice Programme,” judges were trained on modern case flow management techniques, and a concerted effort was made to resolve the backlog of older cases. This improvement had a positive effect on factors related to economic development, including greater entrepreneurship in pilot districts. The author suggests that this reform, which only cost 0.1% of GDP, translated into an increase of 0.5% of GDP.

in Mexico by reducing the idiosyncratic risk faced by firm owners. The data comes from the Mexican economic census of 1998, and the findings are robust to instrumenting for legal quality using historical conditions.

quality of adjudication in Senegal. The reform gave judges the duty and powers to conclude pretrial proceedings within a four-month deadline. The length of the pretrial stage decreased by 42.9 days, the number of pretrial hearings was reduced, and there was no adverse impact on quality. The paper documents positive firm-level effects.

intermediate goods suppliers, with distributors, with lenders and others. The outcomes range from ease of entry, firm size, output, investment (especially efficient allocation of resources), productivity, and growth. A few papers quantify the consequences of lack of justice on firms, particularly in an