The Role of Formal Contract Law and Enforcement in Economic Development PDF Download

Author: Michael J. Trebilcock
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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Book Description
This paper addresses the role of formal contract law and contract enforcement institutions in economic development. Its inquiry is consequentialist: whether the existence of a formal contract law and enforcement regime significantly contributes to economic growth in developing countries. We also address the related issue of the extent to which it is possible for a state to adopt an effective formal contract law and enforcement regime, without also adopting a particular type of political regime. Our inquiry further addresses the extent to which political theorizing about the role and structure of private law (in our case, contract law) applies universally, or whether such theorizing is highly contingent on context-specific political, cultural, and social values and practices. As the paper elaborates, two different hypotheses emerge from the literature. One takes the view that strong formal contract law and enforcement mechanisms are indispensable to economic development, while the other contends that much economic development is realizable through informal contracting mechanisms. To test the validity of these two hypotheses, we provide a critical review of existing literature, including literature on two cases of great contemporary development significance: the so-called 'China Enigma' and the 'East Asian Miracle.' In both of these cases, high rates of economic growth have been achieved, often in the absence of strong formal contract law and enforcement regimes. We argue that at low levels of economic development informal contract enforcement mechanisms may be reasonably good substitutes for formal contract enforcement mechanisms, but become increasingly imperfect substitutes at higher levels of economic development involving large, long-lived, highly asset-specific investments or increasingly complex traded goods and services, especially outside repeated exchange relationships. In the case of the 'China Enigma,' for example, even if the lack of effective formal contract enforcement has not been a major impediment to economic development to date (although some commentators contend otherwise), weak rule of law surely carries other significant costs in a more complete conception of development which embodies other non-instrumental values. We conclude that on one of the central questions in contemporary development debates - do good institutions cause growth, or does growth cause good institutions? - the answer, in the context of contract enforcement mechanisms, is a nuanced one.

Author: Xin He
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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Book Description
The way in which formal contract enforcement becomes effective is a critically important but understudied question for law and development studies. Primarily drawing on field investigations, this paper compares the enforcement performance of two basic-level courts in China, one in a more developed and the other in a less developed region. The level of economic development is found to be crucial in contributing to the courts' performance. Unlike the court users in the less developed area, those in the more developed area become more market-oriented as the local economy diversifies, paving the way for more rigorous judgment enforcement; a developed local economy also allows the court to strengthen institutional building and staff professionalism. The comparison of the two Chinese courts provides empirical evidence with which to evaluate the relationship between formal contract enforcement and economic development.

Author: Debin Ma
Publisher: Stanford University Press
ISBN: 0804777616
Category : Business & Economics
Languages : en
Pages : 385

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Book Description
Recently, a growing body of work on "law and finance" and "legal origins" has highlighted the role of formal legal institutions in shaping financial institutions. However, these writings have focused largely on Europe, neglecting important non-Western traditions that prevail in a large part of the world. Law and Long-Term Economic Change brings together a group of leading scholars from economics, economic history, law, and area studies to develop a unique, global and, long-term perspective on the linkage between law and economic change. Covering the regions of Western Europe, East and South Asia, and the Middle East, the chapters explore major themes regarding the nature and evolution of different legal regimes; their relationship with the state or organized religion; the definition and interpretation of ownership and property rights; the functioning of courts, and other mechanisms for dispute resolution and contract enforcement; and the complex dynamics of legal transplantations through processes such as colonization. The text makes clear that the development of legal traditions and institutions—as embodiments of cultural values and norms—exerts a strong effect on long-term economic change. And it demonstrates that a good understanding of legal origins around the world enriches any debate about Great Divergence in the early modern era, as well as development and underdevelopment in 19th-20th century Eurasia.

Author: Julie Paquin
Publisher: Routledge
ISBN: 1317106091
Category : Law
Languages : en
Pages : 175

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Book Description
This book examines the prospects for business law reform to drive economic development in developing countries. It argues that, despite statements to the contrary, cultural factors and other local conditions in developing countries are not properly taken into account in current business law reform programs. Utilizing the city of Dakar as an example, this book investigates the consequences of this lack of fit between local needs and transplanted legal models by examining the potential and actual impact of the OHADA program of law reform on local business practices. Focusing on how managers make decisions and apply appropriate norms in routine business operations, the book documents how contractual disputes arise and are solved in Dakar and the role played by formal law in these processes. By examining imported law from the point of view of the end-users of legal reforms, the book reveals the complex relationship between formal law, local cultural norms and the activities of SMEs operating in developing economies, and calls for a reconsideration of current law and development theory as well as the role of contract law in business decisions. It will be relevant to all developing countries seeking to align their laws with ’best practice’ as identified by aid institutions.

Author: Gillian K. Hadfield
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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Book Description
One of the fundamental contributions of transaction cost theory and institutional economics has been to focus attention on opening the "black box" of contract enforcement, drawing attention to the institutions required to achieve effective and low-cost contract enforcement. The idea that the effectiveness of contract law is critical to the growth of economic activity is widespread in the literature on development and transition economies. Recent studies attempting to document the relative strength of contract enforcement in different settings (La Porta, et. al., 1998; Djankov, et. al., 2003), however, have focused on relatively abstract notions of "courts" and "legal systems" and have yet to investigate the detailed institutional features that make contract law effective and low-cost. Even if it is correct to identify "common law legal systems" as productive of greater economic growth, for example, we still do not know what it is about those systems that produces this growth and in particular how these systems achieve more effective and lower cost contract enforcement. This paper explores in a detailed way the multiple legal institutions at work in the organization of courts, the judiciary, the legal profession, enforcement services, and the process of lawmaking and legal innovation, all of which play significant roles in structuring an effective and cost-effective regime of contract enforcement.

Author: Svetozar Pejovich
Publisher: Edward Elgar Publishing
ISBN: 1848442904
Category : Business & Economics
Languages : en
Pages : 191

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Book Description
Almost everyone will gain something of value from reading this book. For those who work in the new institutional economics, Pejovich provides a thoughtful treatment of how common-law and civil-law systems affect personal freedoms and rule of law. The book s larger market, however, will comprise educated lay readers, who will gain a deeper appreciation of the foundations of capitalism in the developed world and of the dynamics of interrelated institutional and economic change. Lee J. Alston, The Independent Review . . . a well written, easily read book which casts light on many aspects of law and on questions which are or should be debated in our law schools. . . well laid out and presented. . . Its subject matter makes it essential reading for all those studying comparative law and of course law and economics and even for those studying legislation. It would be more than useful for those engaged in property law, the law of contract and administrative and public law. In other words it would be useful and challenging reading for just about all law teachers and students as well as practitioners who wish to think about the basics of what they are doing. Its easy combination of history, comparative technique, legal fundamentals and economics with no maths would even make it an excellent reader for LAWS 101. Bernard Robertson, New Zealand Law Journal Professor Pejovich has written an impressive lot on comparative economic systems, institutions, policies and broader social aspects of economic development. . . His long work in the field quite predictably made him able to present his views and findings in an ever clearer, more orderly and more profoundly argued way. . . This is one of the rare books in which the author is well aware of what he is talking about and makes sure that the same goes for his readers. Ljubomir Madzar Professor Pejovich has ranged expertly across such seemingly disparate areas as legal systems, culture, economics and public choice theory to give us a thoroughly convincing roadmap for a nation s economic success. The rule of law, enforcement of private contracts, private property rights and an independent judiciary are the basic building blocks. But the common law system, as compared to the civil law system emanating from the European continent, also gets a lot of the credit. This is an erudite, yet happily readable work that takes a lot of the mystery out of differential economic performance among nations. Henry G. Manne, George Mason University School of Law, US Written by one of the pioneers of modern property rights economics this book provides a most insightful, well readable and engaged discussion of the institutional foundations of the Western free enterprise system and the reason for its success, with a special emphasis on the differences between common law and civil law institutions. Readers will especially appreciate the many instructive examples and court cases that serve to illustrate the general argument. Viktor J. Vanberg, Universitaet Freiburg, Germany This is a must-read for anyone who wants to understand why Western capitalism has outperformed all other economic systems. Professor Pejovich explains how the institutions of capitalism, especially those based on common law, make for excellence, even in comparison with Western civil law countries. He presents a compelling theory of how systems evolve through the interactions of formal and informal institutions, an analysis that has deep significance for economic reform proposals throughout the world. John H. Moore, Grove City College, US There are many books on the virtues of capitalism and capitalism as a moral system. Steve Pejovich avoids that mistake. Capitalism, for him, is a system based on human behavior. It survives because it meets the needs that individuals face and provides opportunities that individuals are able to accept. Unlike the utopian visions that have competed against capitalism, it does not impose the vision of a

Author: Guanghua Yu
Publisher: Routledge
ISBN: 1136667342
Category : Business & Economics
Languages : en
Pages : 265

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Book Description
This book is the result of the collective effort of some of the foremost experts and scholars of Chinese law, Asian law, and Chinese economics and carefully examines the relationship between law and China’s economic development. Serious inquiries and candid opinions of the contributors have made for stimulating discussion and debate in many controversial areas. This book is likely to result in further research into factors affecting China’s economic development, political change, and China’s interaction with the international community. The book explores the development of the Chinese legal system from both China’s historical perspective, taking into account the specific political and socioeconomic factors that are shaping Chinese law, and from a comparative perspective exploring the interaction between China and the rest of the world. The book brings together key international scholars of Chinese law and economics including Hualing Fu, Roda Mushkat, Randall Peerenboom, Zhigang Tao and Frank Upham. The first part of the book focuses on the linkages between the formal law and China’s economic development, looking at Chinese courts, economic institutions and firm behaviour as well as contract enforcement and property rights. Part two deals with issues of law, human rights, and social justice as they relate to economic and human development. Taken as a whole, the book offers a unique discourse on the interaction between law and economic and human development in China.

Author: Jonathan Morgan
Publisher: Cambridge University Press
ISBN: 110747020X
Category : Law
Languages : en
Pages : 314

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Book Description
Commercial contract law is in every sense optional given the choice between legal systems and law and arbitration. Its 'doctrines' are in fact virtually all default rules. Contract Law Minimalism advances the thesis that commercial parties prefer a minimalist law that sets out to enforce what they have decided - but does nothing else. The limited capacity of the legal process is the key to this 'minimalist' stance. This book considers evidence that such minimalism is indeed what commercial parties choose to govern their transactions. It critically engages with alternative schools of thought, that call for active regulation of contracts to promote either economic efficiency or the trust and co-operation necessary for 'relational contracting'. The book also necessarily argues against the view that private law should be understood non-instrumentally (whether through promissory morality, corrective justice, taxonomic rationality, or otherwise). It sketches a restatement of English contract law in line with the thesis.

Author: Yong-Shik Lee
Publisher: Routledge
ISBN: 1000520838
Category : Law
Languages : en
Pages : 335

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Book Description
The book examines the theory and practice of law and development. It introduces the General Theory of Law and Development, an innovative approach which explains the mechanisms by which law impacts development. This book analyzes the process of economic development in South Korea, South Africa, and the United States from legal and institutional perspectives. The book also explains why the concept of "development" is not only relevant to developing countries but to developed economies as well. The new edition includes five new chapters addressing the relationships between law and economic development in several key areas, including property rights, political governance, business transactions, state industrial promotion, and international trade and development.

Author: International Monetary Fund
Publisher: International Monetary Fund
ISBN: 1616358750
Category :
Languages : en
Pages : 31

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Book Description
This note explores the interactions between new technologies with key areas of commercial law and potential legal changes to respond to new developments in technology and businesses. Inspired by the Bali Fintech Agenda, this note argues that country authorities need to closely examine the adequacy of their legal frameworks to accommodate the use of new technologies and implement necessary legal reform so as to reap the benefits of fintech while mitigating risks. Given the cross-border nature of new technologies, international cooperation among all relevant stakeholders is critical. The note is structured as follows: Section II describes the relations between technology, business, and law, Section III discusses the nature and functions of commercial law; Section IV provides a brief overview of developments in fintech; Section V examines the interaction between technology and commercial law; and Section VI concludes with a preliminary agenda for legal reform to accommodate the use of new technologies.