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Rights as Signals

42 Pages Posted: 27 Dec 2000  

Daniel A. Farber

University of California, Berkeley - School of Law

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Date Written: December 18, 2000

Abstract

Besides its direct moral benefits, human rights protection may also serve an indirect economic function by conveying a signal about the government in question. Because rights operate as trumps over normal governmental decisions, they have an inherent cost. Because protection of human rights is costly to governments, a government's embrace of constitutionalism provides a broader message about its commitments. In particular, by entrenching protection for human rights, governments can communicate that they are willing to give up power in the short-term to obtain long-term benefits. Investors can infer from this that the government has a low discount rate and is less likely to pose a threat of expropriation. Similarly, when courts vigorously enforce human rights against their governments, they dramatize in the strongest possible way their judicial independence. An independent judiciary is valuable to investors who themselves have no interest in human rights whatsoever. Thus, as a beneficial side-effect, human rights enforcement might help encourage investment and thereby indirectly foster economic growth.

Suggested Citation

Farber, Daniel A., Rights as Signals (December 18, 2000). Available at SSRN: https://ssrn.com/abstract=254349 or http://dx.doi.org/10.2139/ssrn.254349

Daniel A. Farber (Contact Author)

University of California, Berkeley - School of Law ( email )

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