ECONOMICS AND THE RULE OF LAW.

ECONOMICS AND THE RULE OF LAW. Dick Weisfelder recommended this article in The Economist about the research that has been done in economics in the last ten years which argues that the rule of law is critical to economic development. Aid agencies have been influenced by the research to spend billions on extensive rule-of-law programs (for example, training judges and reforming prisons). One line of research argues that what is important is law protecting civil liberties; another argues that protecting property rights is the key. Andrei Shleifer and Robert Vishny argue that the common law (America and England) does a better job of promoting economic performance than does the civil law (France, Germany, Scandinavia). A lot of research poses broad questions which are difficult to test because nature has not performed good enough experiments. Is it the rule of law that matters or the opening of markets? I have been posting about grain markets in Chicago and Ethiopia as evidence that you need both.