How Do Local-Level Legal Institutions Promote Development?

29 Pages Posted: 20 Apr 2016

See all articles by Varun Gauri

Varun Gauri

World Bank; World Bank - Development Research Group (DECRG)

Date Written: November 1, 2009


This paper develops a framework and some hypotheses regarding the impact of local-level, informal legal institutions on three economic outcomes: aggregate growth, inequality, and human capabilities. It presents a set of stylized differences between formal and informal legal justice systems, identifies the pathways through which formal systems promote economic outcomes, reflects on what the stylized differences mean for the potential impact of informal legal institutions on economic outcomes, and looks at extant case studies to examine the plausibility of the arguments presented. The paper concludes that local-level, informal legal institutions can support social substitutes for the enforcement of contracts, although these substitutes tend to be limited in range and scale; they are flexible and could conceivably be adapted to serve the interests of the poor and marginalized if supportive organizational and social resources could be brought to support the legal claims of the disempowered; and they are more likely to support personal integrity rights than the positive liberties that are also constitutive of development as freedom.

Keywords: Legal Products, Children and Youth, Public Institution Analysis & Assessment, Gender and Law, Legal Institutions of the Market Economy

Suggested Citation

Gauri, Varun, How Do Local-Level Legal Institutions Promote Development? (November 1, 2009). World Bank Policy Research Working Paper No. 5108, Available at SSRN:

Varun Gauri (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States


World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
Washington, DC 20433
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics