The Common Law and Economic Growth: Hayek Might be Right
Paul G. Mahoney
University of Virginia School of Law
University of Virginia Law School, Legal Studies Working Paper No. 00-8
Recent finance scholarship finds that countries with legal systems based on the common law provide better investor protections and have more developed financial markets than civil law countries. These findings echo Hayek's claims of the superiority of English to French legal institutions. In this paper, I present evidence that common law countries experienced faster economic growth than civil law countries during the period 1960-1992. I suggest that the difference reflects the common law's greater orientation toward private economic activity and the civil law's greater orientation toward government intervention.
Number of Pages in PDF File: 42
JEL Classification: H11, K10, O17
Date posted: January 31, 2000