DP8139 Legal Institutions and Economic Development

Author(s): Thorsten Beck
Publication Date: December 2010
Keyword(s): Economic development, Legal institutions, Legal system indicators, Property rights
JEL(s): K1, K4, O16, O43, P14
Programme Areas: Financial Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=8139

Legal institutions are critical for the development of market-based economies. This paper defines legal institutions and discusses different indicators to measure their quality and efficiency. It surveys a large historical and empirical literature showing the importance of legal institutions in explaining cross-country variation in economic development. Finally, it presents and discusses three different views of why we can observe the large cross-country variation in legal institutions, the social conflict, the legal origin and the culture and religion hypotheses.