Economic Growth and Judicial Independence - Cross Country Evidence Using a New Set of Indicators
Posted: 20 Jun 2003
Rational politicians have an interest in an independent judiciary because it can potentially help them make their promises more credible. But if politicians' (short-term) preferences deviate from the dicta of the judiciary, they might also have incentives to renege on judicial independence. To make these two conflicting aspects measurable, two indicators are introduced: (i) a de iure indicator focusing on the legal foundations of judicial independence and (ii) a de facto indicator focusing on the real-life amount of judicial independence. It is hypothesized and tested by formulating an econometric model for a cross section of 57 countries that judicial independence affects economic growth. While de iure judicial independence does not have an impact on economic growth, de facto judicial independence positively influences real GDP growth per capita.
Keywords: Economic Growth, Rule of Law, Judicial Independence
JEL Classification: H11, K40, 040, P51
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