The relationship between law and development: Optimists versus skeptics

American Journal of Comparative Law

Volumn 56, Issue 4, 2008, Pages 895-946

  Davis, Kevin E ^a   Trebilcock, Michael J ^a  

^a NONE

Author keywords

[No Author keywords available]

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EID: 56249103131     PISSN: 0002919X     EISSN: None     Source Type: Journal    
DOI: 10.5131/ajcl.2007.0031     Document Type: Article

References (329)

1. Thomas Carothers, The Rule of Law Revival, in PROMOTING THE RULE OF LAW ABROAD: IN SEARCH OF KNOWLEDGE 3 (Thomas Carothers ed., 2006);
2. see also BRIAN TAMANAHA, ON THE RULE OF LAW: HISTORY, POLITICS, THEORY 1-4 (2004).
3. David Trubek, The Rule of Law in Development Assistance: Past, Present and Future, in THE NEW LAW AND ECONOMIC DEVELOPMENT: A CRITICAL APPRAISAL 74 (David M. Trubek & Alvaro Santos eds., 2006);
4. MICHAEL TREBILCOCK & RON DANIELS, RULE OF LAW REFORM AND DEVELOPMENT: CHARTING THE FRAGILE PATH OF PROGRESS (2008).
5. See generally, Orly Lobel, The Paradox of Extralegal Activism: Critical Legal Consciousness and Transformative Politics, 120 HARV. L. REV. 938 (2007) (describing and critiquing dominant assumptions about the limitations of law as a means of effecting social change in the United States).
6. Carothers, supra note 1, 16.
7. Id.
8. KENNETH DAM, THE LAW-GROWTH NEXUS: THE RULE OF LAW AND ECONOMIC DEVELOPMENT (2006).
9. Trubek, supra note 2.
10. See David M. Trubek & Alvaro Santos, Introduction: The Third Moment in Law and Development Theory and the Emergence of a New Critical Practice, in THE NEW LAW AND ECONOMIC DEVELOPMENT,
11. supra note 2. In this respect the Trubek and Santos volume is highly equivocal. For instance, elsewhere in their essay, Trubek and Santos claim that what distinguishes the current intellectual moment is the salience of critique.
12. Id. at 8. Meanwhile Santos' individual contribution to the volume is devoted to describing and explaining lack of consensus about the role of law in development just within the World Bank.
13. See generally, Alvaro Santos, The World Bank's Uses of the "Rule of Law" Promise in Economic Development, in THE NEW LAW AND ECONOMIC DEVELOPMENT, supra note 2, at 253.
14. Trubek & Santos, supra note 8, in THE NEW LAW AND ECONOMIC DEVELOPMENT, supra note 2, 1, 15-17.
15. Kerry Rittich claims that the more holistic conception of the objective of legal reform has now been "normalized," noting that it has been endorsed by leading scholars such as Amartya Sen as well as influential actors such as the World Bank. Kerry Rittich, The Future of Law and Development: Second-Generation Reforms and the Incorporation of the Social, in THE NEW LAW AND ECONOMIC DEVELOPMENT, supra note 2, 203, 208.
16. See also Rachel Kleinfeld, Competing Definitions of the Rule of Law, in PROMOTING THE RULE OF LAW ABROAD, supra note 1, 31 (arguing that the rule of law ought to be viewed as an end rather than a means by legal reformers).
17. See generally, Duncan Kennedy, Three Globalizations of Legal Thought: 1850-2000, in THE NEW LAW AND ECONOMIC DEVELOPMENT,
18. supra note 2, 19.
19. Cf. Brian Tamanaha, The Lessons of Law and Development Studies, 89 AM. J. INT'L L. 470, 470 (1995) ("Law and development has been a field of academic study for about 30 years.").
20. See, e.g., J. S. FURNIVALL, COLONIAL POLICY AND PRACTICE: A COMPARATIVE STUDY OF BURMA AND NETHERLANDS INDIA (1956).
21. For additional references to the literature on colonial administration see John Henry Merryman, Comparative Law and Social Change: On the Origins, Style, Decline & Revival of the Law and Development Movement, 25 AM. J. COMP. L. 457, 468 (1977).
22. Scott Newton, The Dialectics of Law and Development, in THE NEW LAW AND ECONOMIC DEVELOPMENT, supra note 2, 178-79, 181.
23. Rostow identified five such stages: the traditional society, the preconditions for takeoff, the takeoff, the drive to maturity, and the age of high mass consumption. See W.W. ROSTOW, STAGES OF ECONOMIC GROWTH: A NON-COMMUNIST MANIFKSTO (1960).
24. Tamanaha, supra note 10;
25. Peter F. Klarén, Lost Promise: Explaining Latin American Underdevelopment, in PROMISE OF DEVELOPMENT: THEORIES OF CHANGE IN LATIN AMERICA 3, 11 (Peter F. Klarén & Thomas J. Bessert eds., 1986). As Cyril Black, a noted historian and modernization theorist, put it: "Although the problems raised by generalizations from a rather narrow base (the now modern countries) must be acknowledged, the definition of modernity takes the form of a set of characteristics believed to be applicable to all societies. This conception of modernity, when thought of as a model or ideal type, may be used as a yardstick with which to measure any society."
26. CYRIL BLACK, THE DYNAMICS OF MODERNIZATION: A STUDY IN COMPARATIVE HISTORY 68-75 (1966).
27. David M. Trubek, Toward A Social Theory of Law: An Essay on the Study of Law and Development, 82 YALE L. J. 44 (1972).
28. Elliot M. Burg, Law and Development: A Review of the Literature and a Critique of Scholar in Self-Estrangement,' 25 AM. J. COMP. L. 492, 505-06 (1977).
29. Id.
30. Burg, supra note 16, at 492, 505-06.
31. See also Thomas Heller, An Immodest Postscript, in BEYOND COMMON KNOWLEDGE: EMPIRICAL APPROACHES TO THE RULE OF LAW (Erik Jensen & Thomas Heller eds., 2003).
32. David M. Trubek & Marc Galanter, Scholars in Self-Estrangement: Some Reflections on the Crisis in Law and Development Studies in the United States, WIS. L. REV. 1062, 1075-76 (1974);
33. see also Burg, supra note 16, at 509-11. As noted by Trubek and Galanter: The legal development scholars produced critical appraisals of the law schools in Asia, Africa, and Latin America, arguing that by training lawyers to think more instrumentally, the schools could initiate change that would narrow the gap between the present performance of the legal profession and its developmental possibilities. Thus it was proposed that law schools study and explain the relationship between specific legal rules, doctrines, and procedures on the one hand, and national developmental goals on the other, urging their students to work to reform those laws and institutions that failed to further the goals.
34. Lawrence Friedman, Legal Culture and Social Development, 4 LAW & SOC'Y REV. 29, 43 (1969).
35. Robert B. Seidman, The Communication of Law and the Process of Development, WIS. L. REV. 686 (1972).
36. Wade Channell, Lessons Not Learned About Legal Reform, in PROMOTING THE RULE OF LAW ABROAD, supra note 1, 137, 139 ("In many if not most cases the lessons of the law and development movement have simply not been learned by practitioners in the new rule-of-law reform enterprise of the last two decades.").
37. Stephen Golub, The Legal Empowerment Alternative, in PROMOTING THE RULE OF LAW ABROAD, supra note 1, 161.
38. Id. at 164-65, 169-77.
39. See also David Mednicoff, Middle East Dilemmas, in PROMOTING THE RULE OF LAW ABROAD, supra note 1, 251, 268 (endorsing application of Golub's approach in the Middle East).
40. Trubek & Galanter, supra note 19.
41. DOUGLASS NORTH, INSTITUTIONS, INSTITUTIONAL CHANGE AND ECONOMIC PERFORMANCE (1990)
42. [hereinafter INSTITUTIONS, INSTITUTIONAL CHANGE AND ECONOMIC PERFORMANCE];
43. North, UNDERSTANDING THE PROCESS OF ECONOMIC CHANGE (2005)
44. [hereinafter UNDERSTANDING THE PROCESS OF ECONOMIC CHANGE];
45. World Bank, WORLD DEVELOPMENT REPORT 1997: THE STATE IN A CHANGING WORLD.
46. HERNANDO DE SOTO, THE OTHER PATH: THE INVISIBLE REVOLUTION IN THE THIRD WORLD 185 (1989).
47. Id. at 186.
48. Id. at 187.
49. See, e.g., World Bank, WORLD DEVELOPMENT REPORT 2002: BUILDING INSTITUTIONS FOR MARKETS (2002);
50. World Bank, WORLD DEVELOPMENT REPORT 1997: THE STATE IN A CHANGING WORLD (1997);
51. World Bank, WORLD DEVELOPMENT REPORT 1996: FROM PLAN TO MARKET (1996);
52. World Bank, DOING BUSINESS IN 2004: UNDERSTANDING REGULATION (2004).
53. DAM, supra note 6, at 6.
54. For examples of illustrative works in this genre, see the World Bank documents cited above, supra note 30,
55. and Philip M. Nichols, A Legal Theory of Emerging Economies, 39 VA. J. INT'L L. 229 (1999).
56. For another useful survey of the literature, see Frank B. Cross, Law and Economic Growth, 80 TEX. L. REV. 1737 (2002).
57. See, e.g., Robert Cooter, The Rule of State Law and the Rule of Law State: Economic Analysis of the Legal Foundations of Development, in ANNUAL WORLD BANK CONFERENCE ON DEVELOPMENT ECONOMICS 212 (Michael Bruno & Boris Pleskovic eds., 1998);
58. DE SOTO, supra note 27;
59. Kathryn Hendley, Rewriting the Rules of the Game in Russia: The Neglected Issue of the Demand for Law, E. EUR. CONST. REV. 89 (1999);
60. Douglass North, supra note 26, at 89-91, 140-41.
61. Of course, these contemporary analyses track Trubek and Galanter's complaints about the "ethnocentric quality of liberal legalism's model of law in society." See David N. Trubek & Marc Galanter, Scholars in Self-Estrangement: Some Reflections on the Crisis of Law and Development in the United States, WIS. L. REV. 1062 (1974).
62. A much earlier exponent of similar views was Montesquieu, who stated, "[Laws] should be adapted in such a manner to the people for whom they are framed that it should be a great chance if those of one nation suit another." See CHARLES DE SECONDAT & BARON DE MONTESQUIEU, THE SPIRIT OF THE LAWS 6 (Book I) (Anne M. Cohler et al. trans. and eds., 1989).
63. See especially, Cooter, supra note 33
64. and DE SOTO, supra note 27.
65. Katharina Pistor, The Standardization of Law and Its Effect on Developing Economies, 50 AM. J. COMP. L. 101 (2002);
66. Dan Berkowitz, Katharina Pistor & Jean François Richard, Economic Development, Legality, and the Transplant Effect, 47 EUR. ECON. REV. 165 (2003).
67. DAM, supra note 6, 24.
68. DAM, supra note 6, 224.
69. HEINZ KLUG, CONSTITUTING DEMOCRACY: LAW, GLOBALISM AND SOUTH AFRICA'S POLITICAL RECONSTRUCTION 66 (2000).
70. See also Carothers, supra note 1, at 8 (describing constitutional reforms in Eastern Europe and Latin America).
71. KLUG, supra note 38.
72. Oona Hathaway, Do Human Rights Treaties Make a Difference?, 111 YALE L.J. 1936 (2002).
73. Kleinfeld, supra note 9, 34-47 (explaining why respect for norms such as equality and human rights and the rule of law are worthwhile ends);
74. Santos, supra note 8, at 253, 261-63, 265-66 (summarizing claims that the rule of law is intrinsically valuable).
75. Daniel A. Farber, Rights as Signals, 31 J. LEGAL STUD. 83 (2002).
76. DAM, supra note 6, 41.
77. For a recent exposition of this viewpoint and survey of the relevant literature, see Jagdish N. Bhagwati, Democracy and Development: Cruel Dilemma or Symbiotic Relationship?, 6 REV. DEV. ECON. 151-62 (2002);
78. for a discussion of why democracy requires more checks and balances than merely periodic competitive elections, see PAUL COLLIER, THE BOTTOM BILLION 146-49 (2007).
79. See, e.g., Surjit Bhalla, Freedom and Economic Growth: A Virtuous Cycle?, in DEMOCRACY'S VICTORY AND CRISIS 195 (Axel Hadenius ed., 1997).
80. AMARTYA SEN, RESOURCES, VALUES AND DEVELOPMENT (1984);
81. AMARTYA SEN & JEAN DRÈZE, HUNGER AND PUBLIC ACTION (1989);
82. AMARTYA SEN, DEVELOPMENT AS FREEDOM (1999).
83. Immanuel Kant, Perpetual Peace, in THE ENLIGHTENMENT: A COMPREHENSIVE ANTHOLOGY 784 (Peter Gay ed., 1974);
84. Michael Doyle, Kant, Liberal Legacies and Foreign Affairs, Part I, 12 PHIL. & PUB. AFF. 323 (1983).
85. For overviews of the empirical debate, see Adam Przeworski & Fernando Limongi, Political Regimes and Economic Growth, 7 J. ECON. PERSP. 51 (1993);
86. ADAM PRZEWORSKI ET AL., DEMOCRACY AND DEVELOPMENT: POLITICAL INSTITUTIONS AND WELL-BEING IN THE WORLD 1950-1990 (2000);
87. Bhagwati, supra note 44.
88. MANCUR OLSON, POWER AND PROSPERITY: OUTGROWING COMMUNIST AND CAPITALIST DICTATORSHIPS (2000).
89. Id. at 6-7.
90. Id. at 7-12.
91. Cf. Avinash Dixit, Gene M.Grossman & Faruk Gul, The Dynamics of Political Compromise, 108 J. POL. ECON. 531 (2000) (the prospect of an indefinite sequence of reasonably frequent changes in power may also give democratically elected leaders an incentive to cooperate with political opponents in the hopes of receiving reciprocal treatment when they are out of power). Other scholars have observed, and Olson readily acknowledges, that democracies are vulnerable to interest group pressures, voter ignorance and misinformation, and majoritarian forms of oppression of minorities, and that some democratic regimes are likely to be weak, unstable or corrupt.
92. Mancur Olson, Dictatorship, Democracy and Development, 87 AM. POL. SCI. REV. 567, 571 (1993).
93. See also Thomas Carothers, The End of the Transition Paradigm, 13 J. OF DEMOCRACY 5 (2002).
94. DANI RODRIK, ONE ECONOMICS, MANY RECIPES: GLOBALIZATION, INSTITUTIONS AND ECONOMIC GROWTH chap. 5 (2007) (Institutions for High-Quality Growth).
95. CHARLES DE MONTESQUIEU, THE SPIRIT OF THE LAWS, chapters XI and XII.
96. See also THE FEDERALIST No. 51 (James Madison).
97. James D. Gwartney & Randall G. Holcombe, Economic Freedom, Constitutional Structure and Growth in Developing Countries, in INSTITUTIONS AND COLLECTIVE CHOICE IN DEVELOPING COUNTRIES 33, 39 (Mwangi Kimenyi & John Mukum Mbaku eds., 1999);
98. Jean-Jacques Laffont & Mathieu Meleau, Separation of Powers and Development, 64 J. DEV. ECON. 129 (2001).
99. See also ALBERT BRETON, COMPETITIVE GOVERNMENTS: AN ECONOMIC THEORY OF POLITICS AND PUBLIC FINANCE (1996);
100. Torsten Persson et al., Separation of Powers and Political Accountability, 112 Q. J. ECON. 1163 (1997);
101. ROUMEEN ISLAM & CLAUDIO MONTENEGRO, WHAT DETERMINES THE QUALITY OF INSTITUTIONS? (2002);
102. DANIEL LEDERMAN ET AL, ACCOUNTABILITY AND COMPETITION: POLITICAL INSTITUTIONS MATTER (2001).
103. See, e.g., MARTIN SHAPIRO, COURTS: A COMPARATIVE AND POLITICAL ANALYSIS (1981).
104. Douglass North & Barry Weingast, Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth Century England, 49 J. ECON. HIST. 803, 831 (1989).
105. Id.
106. Matthew C. Stephenson, 'When the Devil Turns. . .': The Political Foundations of Independent Judicial Review, 32 J. LEGAL STUD. 59 (2003).
107. See generally BRETON, supra note 55.
108. Barry Weingast, The Economic Role of Political Institutions: Market Preserving Federalism and Economic Development, 11 J. L. ECON. & ORG. 1 (1995).
109. Id. at 9.
110. DAM, supra note 6, at 107 ("While many countries believe that the structure of their government is based on that principle [separation of powers], the content of the principle differs across countries to the point that two fully incompatible versions of that principle exist in the world."), 111-18 (discussing "behavioral independence" of judges in various countries).
111. DAM, supra note 6, 106-11.
112. Id. at 111-18.
113. See generally Timothy Besley et al., Mass Media and Political Accountability, draft chapter for THE RIGHT TO KNOW: INSTITUTIONS AND THE MEDIA 6 (World Bank);
114. Simeon Djankov, Caralee McLeish, Tatiana Nenova & Andrei Shleifer, Who Owns the Media?, typescript (2001).
115. AMARTYA SEN & J. DRÈZE, THE POLITICAL ECONOMY OF HUNGER (1990).
116. Id.
117. See, e.g., Aymo Brunetti & Beatrice Weder, A Free Press is Bad News for Corruption, (Working Paper: University of Basel, April, 1999);
118. see also ISLAM & MONTE-NEGRO, supra note 55.
119. Besley et al., supra note 66, at 6.
120. See generally ANTONY ANGHIE, IMPERIALISM, SOVEREIGNTY AND THE MAKING OF INTERNATIONAL LAW 196-244 (2005).
121. RODRIK, ONE ECONOMICS, MANY RECIPES, supra note 53, chap. 8 (The Global Governance of Trade As if Development Mattered) (recommending that the WTO be viewed as an institution that allows developing countries autonomy to pursue institutional innovations required to stimulate economic growth);
122. Kevin E. Davis, How to Make the Doha Round a Genuine Development Round, 100 ASIL PROC. 226 (2006) (identifying channels through which reforms to WTO regime might influence domestic legal institutions);
123. see also COLLIER, supra note 44, chap. 9 (arguing for various international charters setting out norms for government conduct in a number of areas).
124. Aymo Brunetti & Beatrice Weder, More Open Economies Have Better Governments, 18 (Working Paper: University of Saarland Economic Series 9905,1999);
125. Silvio Borner, Aymo Brunetti & Beatrice Weder, POLITICAL CREDIBILITY AND ECONOMIC DEVELOPMENT 91-95 (1995).
126. See also ISLAM & MONTENEGRO, supra note 55;
127. Daniel Treisman, The Causes of Corruption: A Cross-National Study, 76 J. PUB. ECON. 399 (2000);
128. cf. Dani Rodrik et al., Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development, 9 J. ECON. GROWTH 131 (2004).
129. Brunetti & Weder, supra note 73, at 18.
130. Id.
131. See Carothers, supra note 1, at 3, 7 ("Although its wonderworking abilities have been exaggerated, the desirability of the rule of law is clear."). Both Upham and Santos attribute this view to the World Bank, citing the writings of its former general counsel and senior vice-president, Ibrahim Shihata.
132. See Santos, supra note 8, 269-73;
133. Frank Upham, Mythmaking in the Rule of Law Orthodoxy, in PROMOTING THE RULE OF LAW ABROAD supra note 1, 77-79.
134. For a collection of Shihata's writings, see IBRAHIM F.I. SHIHATA, COMPLEMENTARY REFORM: ESSAYS ON LEGAL, JUDICIAL AND OTHER INSTITUTIONAL REFORMS SUPPORTED BY THE WORLD BANK (1997).
135. Competing Definitions of the Rule of Law, in PROMOTING THE RULE OF LAW ABROAD 31.
136. See generally Santos, supra note 8, 259-66 (discussing alternative conceptions of the rule of law and its relation to development).
137. See, e.g., LON L. FULLER, THE MORALITY OF LAW 39 (rev. ed. 1969).
138. Id. at 200-24.
139. Joseph Raz, The Rule of Law and its Virtue, in THE AUTHORITY OF LAW: ESSAYS ON LAW AND MORALITY 210-29 (1979).
140. For a similar melding of formal and institutional components in the course of defining the rule of law, see Robert S. Summers, A Formal Theory of the Rule of Law, 6 RATIO JURIS 127-42 (1993). Summers provides a more elaborate specification of the institutional components of the rule of law.
141. Id. at 226.
142. See TAMANAHA, supra note 10;
143. see more generally, TAMANAHA, supra note 1.
144. Id. at 476.
145. FULLER, supra note 79, at 44.
146. TAMANAHA, supra note 10, at 476.
147. Kleinfeld, supra note 9, at 61.
148. Dam seems to view the specific legal reforms that he recommends as means of achieving the rule of law, which he defines in much the same manner as the legal theorists discussed in this subsection. See DAM, supra note 6, at 13-17, 24.
149. We characterize him as an optimist because he ultimately endorses the assumption that legal institutions matter as a valid basis for policymaking. DAM, supra note 6, at 230-31.
150. Part III, infra.
151. Trubek & Galanter (1974), supra note 19.
152. John Henry Merryman, Comparative Law and Social Change: On the Origins, Style, Decline & Revival of the Law and Development Movement, 25 AM. J. COMP. L. 457, 459-60 (1977).
153. Trubek & Galanter, supra note 19.
154. Id. at 1078-79.
155. Id. at 1076.
156. See, e.g., David Kennedy, The "Rule of Law," Political Choices, and Development Common Sense, in THE NEW LAW AND ECONOMIC DEVELOPMENT, supra note 2, at 173 ("development strategy requires a detailed examination of the distributional choices effected by various legal rules and regimes to determine, as best one can, their likely impact on growth and development");
157. Rittich, supra note 9, at 228 ("the fact that the development agenda has been reformulated to include the social is almost completely unreflected in the core legal and institutional agenda");
158. Trubek & Santos, supra note 8, at 16 ("A very central objective of our effort has been reinstate distributional issues on the development agenda.").
159. Golub, supra note 23, at 109-11.
160. Mednicoff, supra note 24, at 251, 262-66.
161. For an eloquent and persuasive articulation of the more general importance of local knowledge in policy making, see JAMES C. SCOTT, SEEING LIKE A STATE: HOW CERTAIN SCHEMES TO IMPROVE THE HUMAN CONDITION HAVE FAILED (2002).
162. Santos, supra note 8, at 290-91.
163. Id. at 297-98.
164. Id. at 296-97.
165. Golub, supra note 23, 127-31 (discussing role of incentives created by bureaucratic structures, self-interests, and biases of legal professionals);
166. Laure-Hélène Piron, Time to Learn, Time to Act in Africa, in PROMOTING THE RULE OF LAW ABROAD, supra note 1, at 275, 294-97 (identifying problems posed by internally-generated incentives to approve poor projects, lack of relevant experience on part of justice sector experts assigned to development projects and conflicts between donors).
167. Kleinfeld, supra note 41 , at 56-58.
168. See also Channell, supra note 22, at 156 (discussing range of reasons why donors might sponsor rule of law reforms).
169. Channell, supra note 22, at 149-56.
170. Piron, supra note 102, at 298.
171. For a general discussion of shortcomings of the institutions that deliver development aid, see WILLIAM EASTERLY, WHITE MAN'S BURDEN: WHY THE WEST'S EFFORTS TO AID THE REST HAVE DONE SO MUCH ILL AND SO LITTLE GOOD (2006).
172. Simeon Djankov et al., Courts, 118 Q.J. ECON. 453 (2003) (showing relationship between legal origin and enforcement of contracts);
173. Rafael La Porta et al., Legal Determinants of External Finance, 52 J. FIN. 1131 (1997) (legal origin and protection of investors);
174. Rafael La Porta et al., Law and Finance, 106 J. POL. ECON. 1113 (1998) (same);
175. Simeon Djankov et al., The Regulation of Entry, 117 Q. J. ECON. 1 (2002) (legal origin and regulation of entry);
176. Juan Botero et al., The Regulation of Labor, Q. J. ECON. (2004) (legal origin and regulation of labor);
177. Paul G. Mahoney, The Common Law and Economic Growth: Hayek Might be Right, 30 J. OF LEGAL STUD. 503 (2001) (legal origin and economic growth).
178. Cf. Daron Acemoglu et al., The Colonial Origins of Comparative Development: An Empirical Investigation, 91 AM. ECON. REV. 1369 (2001) (finding that correlation between legal heritage and measures of institutional quality disappears once one takes into account the impact of variations in the policies of colonizing powers);
179. Daniel Berkowitz et al., Economic Development, Legality, and the Transplant Effect, 47 EUR. ECON. REV. 165 (2003) (finding that correlation between legal heritage and measures of institutional quality disappears once historical extent of transplantation with adaptation in the nineteenth century is taken into account).
180. In a similar vein, Olson argues that "autocracy is prevented and democracy is permitted by the accidents of history that leave a balance of power," or stalemate-a dispersion of force and resources that makes it impossible for any one leader or group to overpower all of the others. In such circumstances, the leaders of the competing groups have an incentive to create institutional arrangements which prevent any one group from monopolizing power. (Olson also notes two further necessary conditions for democracy to emerge. In order to prevent the emergence of "mini-autocracies," competing groups should be dispersed over the entire region. There must also not be any imminent possibility of conquest by neighboring regimes.) This view seems to render serious political change contingent upon the accidents of history. OLSON, supra note 49, at 33, 573.
181. See Brian Arthur, Self-Reinforcing Mechanisms in Economics, in THE ECONOMY AS AN EVOLVING COMPLEX SYSTEM (Phillip Anderson et al. eds., 1988);
182. W. Brian Arthur, Competing Technologies, Increasing Returns and Lock-in by Historical Events, 99 ECON. J. 116 (1989);
183. Paul David, Clio and the Economics of QWERTY, 75 AM. ECON. REV. 332 (1985).
184. INSTITUTIONS, INSTITUTIONAL CHANGE AND ECONOMIC PERFORMANCE, supra note 26;
185. UNDERSTANDING THE PROCESS OF ECONOMIC CHANGE, supra note 26.
186. INSTITUTIONS, INSTITUTIONAL CHANGE AND ECONOMIC PERFORMANCE, supra note 26, at 99.
187. Id. at 101.
188. World Bank, supra note 26.
189. Thomas Carothers, The End of the Transition Paradigm, 13 J. DEMOCRACY 5 (2002).
190. Daniel Kaufmann & Aart Kraay, Growth Without Governance, (World Bank Policy Research Working Paper No. 2928 July 2002).
191. Piron, supra note 102, at 281-82.
192. Id.
193. SEN, supra note 46, at 48.
194. See, Kleinfeld, supra note 41, at 55-6 ("Achieving rule-of-law ends requires political and cultural, not only institutional, change.");
195. Matthew Stephenson, A Trojan Horse in China, in PROMOTING THE RULE OF LAW ABROAD supra note 1, at 191 (arguing that China's political elite is likely to thwart or co-opt legal reforms that threaten their interests);
196. Matthew Spence, The Complexity of Success in Russia, in PROMOTING THE RULE OF LAW ABROAD supra note 1, at 217 (attributing success of U.S. supported reforms in Russia to propitious political conditions);
197. Mednicoff, supra note 24, at 269 (noting that successful reform in the Middle East will depend on cooperation of political elites);
198. Piron, supra note 102, at 287-90 (rule-of-law assistance must be sensitive to the political context);
199. Lisa Bhansali & Christina Biebesheimer, Measuring the Impact of Criminal Justice Reform in Latin America, in PROMOTING THE RULE OF LAW ABROAD, supra note 1, at 301, 303-04 (noting that reforms in Latin American were associated with efforts to consolidate political transition from authoritarianism to democracy);
200. See Kennedy, supra note 95, at 95 (tracing changes in experts' discourse about development policy since 1945 and noting how contemporary law and development discourse obscures political issues that underlie choices about legal rules and regimes);
201. Kerry Rittich, The Future of Law and Development: Second Generation Reforms and the Incorporation of the Social, in THE NEW LAW AND ECONOMIC DEVELOPMENT, supra note 2, at 248, 252 (emphasizing that the task of rehabilitating institutional reforms that promote social justice is a political task).
202. DAM, supra note 6, at 69.
203. See,e.g., MAHMOOD MAMDANI, CITIZEN AND SUBJECT: CONTEMPORARY AFRICA AND THE LEGACY OF LATE COLONIALISM (1996) (tracing despotic features of post-colonial African governments to despotic colonial rule);
204. Matthew Lange, British Colonial Legacies and Political Development, 32 WORLD DEV. 905 (2004) (same).
205. Daron Acemoglu et al., supra note 106.
206. To the extent that descriptions of such reforms were provided they would typically include restrictions on foreign investment and import-substitution policies; reform of oppressive land tenure regimes; granting workers & significant role in the governance of enterprises; worker and farmer co-operatives; state-owned enterprises and creating economic and social rights, i.e., constitutionally enshrined rights to education, health services, food, housing, employment, and income. See generally SAMIR AMIN, MALDEVELOPMENT: ANATOMY OF A GLOBAL FAILURE (1990), Socialist Models of Development, 9 SPECIAL ISSUE OF WORLD DEV. (1981);
207. Adamantia Pollis, Human Rights, Third World Socialism and Cuba, 9 WORLD DEV. 1005 (1981).
208. Another important school of thought, of which Jared Diamond and Jeffrey Sachs are perhaps the best-known modern proponents, examines the ways in which geography influences economic development through its impact upon agricultural and industrial productivity rather than institutional quality. Taking a long-run perspective, Diamond suggests that geography has determined agricultural productivity and relative susceptibility to disease by influencing the availability of animal and plant species suitable for domestication. See JARED DIAMOND, GUNS, GERMS AND STEEL: THE FATE OF HUMAN SOCIETIES (1997). Focusing on more recent history, Sachs and his coauthors claim that countries that are located in the tropics and which have a high population density in areas more than 100 kilometers from the coast are at a severe natural disadvantage. They argue that tropical regions bear a higher disease burden and have lower agricultural productivity. Meanwhile, the proximity of a country's population to the seacoast is an important determinant of its ability to promote economic growth by exporting labor-intensive goods.
209. See John L. Gallup et al., Geography and Economic Growth, 22 INT'L REG. SCI. REV. 179 (1999). We do not focus upon these theories of how geography influences development because there is compelling crosscountry evidence that in the modern era, geography has influenced development principally through its impact upon institutional quality.
210. See William Easterly & Ross Levine, Tropics, Germs and Crops: How Endowments Influence Economic Development, 50 J. MONETARY ECON. 3 (2003);
211. Rodrik et al., supra note 73.
212. Kenneth L. Sokoloff & Stanley L. Engerman, History Lessons: Institutions, Factor Endowments, and Paths of Development in the New World, 14 J. ECON. PERSP. 217 (2000);
213. Stanley L. Engerman & Kenneth L. Sokoloff, Factor Endowments, Inequality, and Paths of Development Among New World Economies, (NBER Working Paper No. 9259, Oct. 2002).
214. This argument is foreshadowed by Baldwin's earlier claim that capital-intensive extractive industries in which ownership tends to be highly concentrated and which rely upon a large class of low-income, unskilled laborers, typically generate few forward or backward "linkages," meaning that they generate little demand for local inputs or processing services, little additional spending upon locally produced consumer goods, and limited tax revenues. Most importantly for present purposes, Baldwin suggested that the dominant groups in such societies tend to erect "social and economic barriers" to limit the upward mobility of the low-income group. See R. E. Baldwin, Patterns of Settlement in Newly Settled Regions, 24 MANCHESTER SCHOOL OF SOC. & ECON. STUD. 161 (1956).
215. Richard M. Auty, Natural Resource Endowment, The State, and Development Policy, 9 J. INT'L DEV. 651 (1997);
216. Richard M. Auty & Alan H. Gelb, Political Economy of Resource-Abundant States, in RESOURCE ABUNDANCE AND ECONOMIC DEVELOPMENT 3-10 (Richard M. Auty ed., 2001).
217. See also Jeffrey D. Sachs & Andrew M. Warner, Natural Resource and Economic Development: the Curse of Natural Resources, 45 EUR. ECON. REV. 827 (2001);
218. COLLIER, supra note 44;
219. ESCAPING THE RESOURCE CURSE (Macartan Humphreys et al. eds., 2007) (providing evidence that countries that are well-endowed with natural resources often experience relatively low rates of economic growth). Auty notes that a predatory state may also arise in an ethnically divided peasant society.
220. William Easterly, Can Institutions Resolve Ethnic Conflict, 49 ECON. DEV. & CULT. CHANGE 687 (2001);
221. PATRICK CHABAL & JEAN-PASCAL DALOZ, AFRICA WORKS: DISORDER AS POLITICAL INSTRUMENT (1999).
222. The adverse impact of ethnic diversity upon the production of public goods might also be manifested, for instance, in the inability to agree upon a common language of instruction in schools, the communities that should benefit from investments in roads, schools, healthcare, and telecommunications or the sectors to which industrial assistance ought to be channelled. Alberto Alesina, et al., Public Goods and Ethnie Divisions, 114 Q. J. ECON. 1243 (1999).
223. Guillermo O'Donnell, Polyarchies and the (Un) Rule of Law in Latin America, in THE (UN) RULE OF LAW AND THE UNDERPRIVILEGED IN LATIN AMERICA 303 (Juan Mendez, Guillermo O'Donnell & Paulo Sérgio Pinheiro eds., 1998). He also argues that economic inequality undermines respect for the rule of law by limiting the capability of the most impoverished members of society to exercise their legal rights.
224. See also SEYMOUR MARTIN LIPSET, POLITICAL MAN: THE SOCIAL BASES OF POLITICS 51 (1963).
225. Alberto Alesina & Roberte Perotti, Income Distribution, Political Instability and Investment, 40 EUR. ECON. REV. 1203, 1204 (1996).
226. Amy Chua, Markets, Democracy and Ethnicity: Toward a New Paradigm for Law and Development, 108 YALE L.J. 1 (1998);
227. Amy L. Chua, The Paradox of Free Market Democracy: Rethinking Development Policy, 41 HARV. INT'L L. J. 287 (2000);
228. AMY CHUA, WORLD ON FIRE: HOW EXPORTING FREE MARKET DEMOCRACY BREEDS ETHNIC HATRED AND GLOBAL INSTABILITY (2003).
229. Political instability is an important component of the most popular measures of institutional quality, on the grounds that it tends to act as a deterrent to investment. See Alesina & Perotti, supra note 131.
230. See DAM, supra note 6, at 60-69 (reviewing theory and evidence on relationships between culture, law and economic development);
231. Kleinfeld supra note 9 at 5556 (culture can determine impact of legal reform);
232. Channell, supra note 22, at 146-48 (same);
233. Stephen Golub, A House Without a Foundation, in PROMOTING THE RULE OF LAW ABROAD, supra note 1, 105 at 116 (same);
234. Kennedy, supra note 95, at 155, 164 (mainstream development scholars now believe culture is important);
235. Rittich, supra note 9 (international financial institutions are now interested in the relationship between culture, law and economic growth).
236. Cf. Upham, supra note 76, at 97-98 (showing that deliberate legal reforms rather than culture explained variation in levels of Japanese litigation).
237. DAM, supra note 6, at 60-69. Some of the literature reviewed by Dam is discussed below.
238. See generally CULTURE MATTERS: HOW VALUES SHAPE HUMAN PROGRESS (Lawrence E. Harrison & Samuel P. Huntington eds., 2000);
239. LAWRENCE HARRISON, THE CENTRAL LIBERAL TRUTH: HOW POLITICS CAN CHANGE A CULTURE AND SAVE IT FROM ITSELF (2000).
240. For a recent detailed interpretation of Max Weber's views, see Chantal Thomas, Max Weber, Talcott Parsons and the Sociology of Legal Reform, 15 MINN. J. INT'L L. 383 (2006).
241. David Landes, Culture Makes All the Difference, in CULTURE MATTERS, supra note 136.
242. HARRISON, supra note 136, at 36-47;
243. for a much more eclectic range of views on the relationship between culture and development, see contributions in Culture and Public Action (Vijayendra Rao & Michael Walton eds., 2004).
244. See Rafael La Porta et al., The Quality of Government, 15 J. L. ECON. & ORG. 222 (1999);
245. Daniel Treisman, The Causes of Corruption: A Cross-National Study, 76 J. PUB. ECON. 399 (2000).
246. Robert Putnam, MAKING DEMOCRACY WORK: CIVIC TRADITIONS IN MODERN ITALY 15 (1993).
247. Id. at 88.
248. Id. at 167.
249. Putnam argues that norms of reciprocity are harder to maintain in vertically structured societies. Higher-ranking members will not fear punishment from their subordinates, since it is unlikely that such punishment will be forthcoming. As a result, the exploitation of subordinates will be more frequent. Meanwhile, the subordinates themselves, who depend for their welfare upon the favor of their superiors, "hold nothing hostage to one another" and are thus more likely to engage in opportunistic behavior amongst themselves. Putnam argues that a horizontal structure is more conducive to the norms of reciprocity which characterize a civic society. Thus, he theorizes that the greater the number of horizontal networks linking community members together, the greater the losses suffered by a member who defects from an individual transaction. Putnam supra note 141 at 173-175.
250. See also, Ronald J. Oakerson, Reciprocity: A Bottom-Up View of Political Development, in RETHINKING INSTITUTIONAL ANALYSIS AND DEVELOPMENT 141 (Vincent Ostrom, David Feeny & Hartmut Picht eds., 1988).
251. Id. at 172.
252. PUTNAM, supra note 141, at 182.
253. See Frances Fukuyama, Social Capital, Civil Society and Development, 22 THIRD WORLD Q. 7 (2001).
254. See, e.g., GERT H. HOFSTEDE, CULTURE'S CONSEQUENCES: INTERNATIONAL DIFFERENCES IN WORK-RELATED VALUES (1980) (comparing cultures in terms of uncertainty avoidance, power distance (a measure of preference for autocratic as opposed to consultative exercise of authority), individualism, and masculinity);
255. Shalom H. Schwartz, Cultural Value Differences: Some Implications for Work, 48 APPLIED PSYCHOL. INT'L REV. 23 (1999)
256. (comparing cultures in terms of respect for autonomy as opposed to embeddedness, hierarchy as opposed to egalitarianism, and mastery as opposed to harmony). In this literature the values that constitute a culture have been defined as "the implicitly or explicitly shared, abstract ideas about what is good, right, and desirable in a society." Amir Licht et al., Culture Rules: The Foundations of the Rule of Law and Other Norms of Governance, (unpublished working paper dated June 9, 2002, available online at ssrn.com),
257. citing ROBIN M. WILLIAMS, AMERICAN SOCIETY: A SOCIOLOGICAL INTERPRETATION (3d ed. 1970).
258. Licht et al., supra note .
259. HENRY SUMNER MAINE, ANCIENT LAW: ITS CONNECTION WITH THE EARLY HISTORY OF SOCIETY, AND ITS RELATION TO MODERN IDEAS 75-78 (1861);
260. FRIEDRICH KARL VON SAVIGNY, OF THE VOCATION OF OUR AGE FOR LEGISLATION AND JURISPRUDENCE 48 (Abraham Hayward trans., 1831).
261. ALAN WATSON, SOCIETY AND LEGAL CHANGE 8 (1977).
262. See, e.g., Alan Watson, Legal Change: Sources of Law and Legal Change, U. PA. L. REV. 1121, 1146-47 (1983).
263. Paul Mahoney, The Common Law and Economic Growth: Hayek Might be Right, 30 J. LEGAL STUD. 503 (2001).
264. But see Daniel Treisman, The Causes of Corruption: A Cross-National Study, 76 J. PUB. ECON. 399 (2000) (suggesting that legal culture is determined by colonial heritage as opposed to merely whether a country qualifies as common law and civil law).
265. Cf. DANIEL KAUFMANN, GOVERNANCE REDUX: THE EMPIRICAL CHALLENGE (2004) (challenging findings that there is a strong relationship between legal heritage and economic development).
266. Thomas Heller, An Immodest Postscript, in BEYOND COMMON KNOWLEDGE (Erik Jensen & Thomas Heller eds., 2003), supra note 18.
267. See contributions in Rao & Walton, supra note 139,
268. esp. AMARTYA SEN, HOW DOES CULTURE MATTER?
269. Gillian K. Hadfield, The Levers of Legal Design: Institutional Determinants of the Quality of Law, 36 J. COMP. ECON. 43 (2008).
270. For a survey of the literature, see Sally Engle Merry, Legal Pluralism, 22 LAW & SOC'Y REV. 869 (1988).
271. See Tom Ginsburg, Does Law Matter for Economic Development? Evidence from East Asia, 34 LAW & SOC'Y REV. 829 (2000);
272. Amanda Perry, Effective Legal Systems and Foreign Direct Investment: In Search of the Evidence, 49 INT'L COMP. L. Q. 779 (2000);
273. Amanda Perry, The Relationship Between Legal Systems and Economic Development: Integrating Economic and Social Approaches, 29 J. L. & SOC'Y 282 (2002);
274. Amanda Perry-Kessaris, Finding and Facing Facts About Legal Systems and Foreign Direct Investment in South Asia, 23 LEGAL STUD. 649 (2003);
275. Upham, supra note 76;
276. Kanishka Jayasuriya, Introduction: A Framework for the Analysis of Legal Institutions in East Asia, in LAW, CAPITALISM, AND POWER IN ASIA 7 (Kanishka Jayasuriya ed., 1999).
277. Id.
278. See Upham, supra note 76.
279. MINXIN PEI, CHINA'S TRAPPED TRANSITION: THE LIMITS OF DEVELOPMENTAL AUTOCRACY (2006);
280. Michael Trebilcock & Jing Leng, The Role of Formal Contract Law and Enforcement in Economic Development, 92 VA. L. REV. 1517, 1554-65 (2006) (and references therein);
281. DAM, supra note .
282. See, e.g., Stewart Macaulay, Non-Contractual Relations in Business: A Preliminary Study, 28 AM. SOC. REV. 55 (1963);
283. ROBERT ELLICKSON, ORDER WITHOUT LAW: HOW NEIGHBORS SETTLE DISPUTES (1991);
284. Lisa Bernstein, Opting Out of the Legal System: Extralegal Contractual Relations in the Diamond Industry, 21 J. LEGAL STUD. 115 (1992);
285. Sally Merry refers to this line of scholarship as the "new legal pluralism," distinguishing it from "classical legal pluralism" which focused on legal pluralism in former European colonies. See Merry, supra note 158.
286. Douglass C. North, The New Institutional Economics and Third World Development, in THE NEW INSTITUTIONAL ECONOMICS AND THIRD WORLD DEVELOPMENT 17 (J. Harriss et al., eds., 1995).
287. See the review essay by Richard McAdams & Eric Rasmusen, Norms in Law and Economics, in HANDBOOK OF LAW AND ECONOMICS (Mitchell Polinsky & Steven Shavell eds., 2007);
288. Michael Trebilcock & Paul Erik Veel, Property Rights and Development: The Contingent Case for Formalization, University of Pennsylvania Journal of International Law (forthcoming).
289. To cite just one example, although Weingast agrees that the purported benefits of federalist constraints mean nothing unless political actors refrain from violating those constraints, he claims that it is possible for federalism to be "self-enforcing." He argues that even powerful political actors will be unlikely to attempt to violate a constitutional constraint if a significant proportion of the population is likely to mobilize and punish violations. This is most likely to occur if there is a consensus among citizens that the constraint is legitimate, implying that citizens hold relatively similar views about the appropriate bounds of government and the society is sufficiently cohesive that its members are willing to punish violations that only affect other groups. See Weingast, supra note 61, at 10. This aspect of Weingast's reasoning suggests that he is skeptical about the role of legal norms in sustaining federalism. To be fair, however, Weingast's analysis also contains a more optimistic component as he argues that even if they are not enforced by formal institutions legal norms can still assist in creating the requisite societal consensus: "An appropriately chosen set of public rules embodied in a constitution can serve as a coordination device because it provides each citizen with a similar way of judging and reacting to state action."
290. Id. at 15, in effect by creating a set of widely agreed focal points. Weingast thus envisions an interaction between legal and non-legal norms as producing the social consensus necessary to ensure that government commits credibly to protecting property and contract rights.
291. Id. at 25-26.
292. The fact that Great Britain manifested all three of these characteristics for a very long time without a written constitution and with a formal legal commitment to parliamentary supremacy provides a compelling illustration of this point.
293. Besley et al. emphasize the role that libel laws play in protecting public officials from media reports that could have detrimental effects on the careers of the public officials. More expansive libel laws tend to provide an incentive for public officials to manipulate the media and for the media to comply with the public officials due to cost savings associated with avoidance of libel suits. See Besley et al., supra note 66, at 7.
294. See also SUSAN ROSE-ACKERMAN, CORRUPTION AND GOVERNMENT: CAUSES, CONSEQUENCES, AND REFORM 166 (1999).
295. Besley, supra note 66, at 7.
296. ROSE-ACKERMAN, supra note 168, at 167.
297. Carothers, supra note 1, at 17-19.
298. Id. at 7.
299. The essay was originally published as Thomas Carothers, The Rule of Law Revival, 77 FOREIGN AFFAIRS 95 (1998).
300. Upham, supra note 76.
301. Santos, supra note 8, at 282-28.
302. Rittich, supra note 9, at 224.
303. Id. at 216, 247 (". . . it seems unlikely that good governance and legal and institutional matters could be entirely separate from the realization of social objectives").
304. DAM, supra note 6, at 231.
305. Id. at 230.
306. Daniel Kaufmann et al., Governance Matters, (1999) (World Bank Policy Research Working Papers No. 2196) (available for download on http:// www.worldbank.org/research);
307. Rethinking Governance: Empirical Lessons Challenge Orthodoxy, World Bank, Discussion Draft, Mar. 11, 2002;
308. see also DANIEL KAUFMANN ET AL., GOVERNANCE MATTERS VII: GOVERNANCE INDICATORS FOR 1996-2007 (2008);
309. Governance Redux: The Empirical Challenge, in THE GLOBAL COMPETITIVENESS REPORT (Xavier Sala-i-Martin ed., 2004).
310. DANIEL KAUFMANN, GOVERNANCE REDUX: THE EMPIRICAL CHALLENGE 14 (2004).
311. Rodrik et al., supra note 73.
312. Francis Fukuyama, Development and the Limits of Institutional Design, Global Development Network, St. Petersburg, Russia, (Jan. 20, 2006).
313. Edward L. Glaeser et al., Do Institutions Cause Growth?, 9 J. ECON. GROWTH 271 (2004).
314. See DAM, supra note 6.
315. William Easterly & Ross Levine, Tropics, Germs and Crops: How Endowments Influence Economic Development, 50 J. MONETARY ECON. 3 (2003);
316. Rodrik et al., supra note 73. Acemoglu, Johnson, and Robinson also show that among the former European colonies, regions that were most prosperous in 1500 AD were generally the least prosperous and had the worst-performing legal institutions in 1995. The reversal in prosperity occurred in the late eighteenth and early nineteenth centuries, coinciding with industrialization. If legal institutions were crucial determinants of prosperity and geographic factors were the crucial determinants of institutional quality then the Reversal of Fortune' would not have occurred; the regions that were prosperous in 1500 should have ended up with relatively good institutions and remained prosperous. Some may argue that the fact that the Reversal of Fortune did occur suggests either that factors besides geography determine the quality of legal institutions. However, it is also possible that the legal institutions that geography does shape are not critical to prosperity because the regions that were prosperous in 1500 had poor legal institutions.
317. Id.
318. 2 is between 0.26 and 0.27) and, as he acknowledges, he cannot rule out the possibility that judicial independence causes rather than is caused by democratic stability and political competition. Stephenson, supra note 59.
319. For an extended methodological critique of the limitations of these studies, see Andrew Williams & Abu Siddique, The Use (and Abuse) of Governance Indicators in Economics: A Review, ECONOMICS OF GOVERNANCE (2007).
320. See also FRANCIS FUKUYAMA, STATE- BUILDING: GOVERNANCE AND WORLD ORDER IN THE 21ST CENTURY (2004).
321. Rodrik et al., supra note 73, at 157-58.
322. See more generally, RODRIK, supra note 53.
323. Rohini Pande & Christopher Udry, Institutions and Development: A View from Below, Yale University, Nov. 18, 2005.
324. See the studies in BEYOND COMMON KNOWLEDGE: EMPIRICAL APPROACHES TO THE RULE OF LAW (Erik Jensen & Thomas Heller eds., 2003);
325. see also TREBILCOCK & DANIELS, supra note 2.
326. See, e.g. Kevin Davis, What Can the Rule of Law Variable Tell Us About Rule of Law Reforms?, 26 MICH. J. INT'L L. 141 (2004);
327. Kevin Davis & Michael B. Kruse, Taking the Measure of Law: The Case of the Doing Business Project, 32 LAW & SOC. INQUIRY 1095 (2007);
328. Williams & Siddique, supra note 188.
329. See Sharun Mukand & Dani Rodrik, In Search of the Holy Grail: Policy Convergence, Experimentation, and Economic Performance, 95 AM. ECON. REV. 374 (2005).