The Relationship between Legal Systems and Economic Development: Integrating Economic and Cultural Approaches

Abstract

This paper seeks to demonstrate the need to bridge the gap between the economic and culture-based approaches to two issues which are fundamental to the debate over the relationship between legal reform and economic development: (a) the relative importance which economic actors around the world place on the legal system and (b) the core components of an effective legal system, as defined by those economic actors. It first outlines the major tenets of current economic legal reform policy, focusing on its underlying assumption that the perceptions and expectations of economic actors around the world do not vary significantly. Data from Geert Hofstede's study of variance in cultural values are then analysed in order to demonstrate how cultural values might affect private sector perceptions and expectations of legal systems as supporters of material progress. It concludes that there is a clear need for a more interdisciplinary approach to the debate over the relationship between legal reform and economic development, and the potential variance in private sector perceptions and expectations of legal systems in particular. Such an approach might be initiated through a systematic integration of existing data and theory from each discipline, reinforced by a new multi-country survey.