The Judiciary and Economic Development

41 Pages Posted: 22 Mar 2006

See all articles by Kenneth W. Dam

Kenneth W. Dam

University of Chicago - Law School; Brookings Institution

Date Written: October 2006


No degree of substantive law improvement can bring the rule of law to a country without effective enforcement, and a sound judiciary is the key to enforcement. Judicial independence and the strength and efficiency of judiciaries are associated with economic growth.

Some research finds legal formalism (that is, procedural complexity) undesirable. Though procedural complexity may be a barrier to judicial efficiency, it is also true that some procedural rules are designed to avoid legal error, also surely an aspect of efficiency. In any event, many of the measured differences in formalism between the common law and civil law are related to the far different role of counsel and judge in the two legal systems. Judicial efficiency measured in terms of duration of cases shows an extraordinarily wide variance among countries within individual legal families, suggesting that something at least as significant as legal origin may be involved.

The related concepts of separation of powers and of checks and balances are not well-defined, and their meaning varies depending on the country and the objective of the constitutional founders. For economic development the constitutional provisions on review of administrative acts take on special importance. Judicial independence is not just a question of the structural independence of the judiciary within the governmental system, but also of the behavioral independence of individual judges. The latter is based both on law (for example, lifetime tenure) and on the method of appointment of the judiciary, but also on the education, economic security, and place in society of individual judges. Especially noteworthy in this regard is the traditional independence of English judges despite the absence of constitutional structural independence and of any power of judicial review.

Keywords: judiciary, judicial, rule of law, enforcement, law and finance, legal origin, institutions, formalism, legal error, civil law, common law, separation of powers, checks and balances, judicial independence, life tenure, constitution, Parliament, Constitutional Council, Assembly, Lord Chancellor

Suggested Citation

Dam, Kenneth W., The Judiciary and Economic Development (October 2006). U Chicago Law & Economics, Olin Working Paper No. 287, Available at SSRN: or

Kenneth W. Dam (Contact Author)

University of Chicago - Law School ( email )

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Brookings Institution ( email )

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