Economic Development, Legality and the Transplant Effect

49 Pages Posted: 3 Jan 2000

See all articles by Katharina Pistor

Katharina Pistor

Columbia University School of Law

Daniel Berkowitz

University of Pittsburgh - Department of Economics

Jean-Francois Richard

University of Pittsburgh - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: November 1999

Abstract

This paper analyzes the determinants of effective legal institutions (legality) and their impact on economic development today using data from 49 countries. We show that the way the law was initially transplanted and received is a more important determinant than the supply of law from a particular legal family (i.e. English, French, German, or Scandinavian). Countries that have developed legal orders internally, adapted the transplanted law to local conditions, and/or had a population that was already familiar with basic legal principles of the transplanted law have more effective legality than "transplant effect" countries that received foreign law without any similar pre-dispositions. Controlling for the supply of legal families, we find that legality is roughly one third lower in transplant effect countries. While the transplant effect has no direct impact on economic development, it has a strong indirect effect via its impact on legality. The strong path dependence between economic development, legality and the transplant effect helps explain why legal technical assistance projects that focus primarily on improving the laws on the books frequently have so little impact. Finally, our statistical methodology produces a legality index based on observed legality proxies that almost fully captures their interaction with the way in which the law was transplanted, the supply of particular legal families and economic development.

Suggested Citation

Pistor, Katharina and Berkowitz, Daniel and Richard, Jean-Francois, Economic Development, Legality and the Transplant Effect (November 1999). Available at SSRN: https://ssrn.com/abstract=183269 or http://dx.doi.org/10.2139/ssrn.183269

Katharina Pistor

Columbia University School of Law ( email )

435 West 116th Street
New York, NY 10025
United States
212-854-0068 (Phone)
212-854-7946 (Fax)

Daniel Berkowitz (Contact Author)

University of Pittsburgh - Department of Economics ( email )

4711 WWPH
Pittsburgh, PA 15260
United States
412-648-7072 (Phone)
412-648-3011 (Fax)

HOME PAGE: http://www.pitt.edu/~dmberk

Jean-Francois Richard

University of Pittsburgh - Department of Economics ( email )

4901 Wesley Posvar Hall
230 South Bouquet Street
Pittsburgh, PA 15260
United States
412-648-1750 (Phone)

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