RULE OF LAW, LEGAL DEVELOPMENT AND ECONOMIC GROWTH: PERSPECTIVES FOR PAKISTAN

  • Hasan LUBNA Pakistan Institute of Development Economics, Islamabad, Pakistan

Abstract

Rule of Law and strong legal systems are considered a pre-condition for sustained development. Their relative weakness in the under-developed world is considered as the main obstacle to growth. Strengthening Rule of Law and legal systems has, therefore, become a standard advice from the developing community. Pakistan, too, has witnessed a surge in demand for Rule of Law in recent years. Capitalizing on this domestically garnered mandate, this paper reviews the legal obstacles to economic growth in Pakistan. It finds significant impediments for growth and market development due to legal shortcomings in the case of Pakistan.

References

[1] Acemoglu, D., Johnson, S., and Robinson, J. A.. 2001. The Colonial Origins of Comparative Development: An Empirical Investigation. American Economic Review 91: December, 1369–1401.
[2] Acemoglu, D., Johnson, S., and Robinson, J. A. 2002. Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution. Quarterly Journal of Economics 117: November, 1231–1294.
[3] Acemoglu, D. 2003. The Root Cause. Finance and Development. June, 27–30.
[4] Acemoglu, D., Johnson, S., and Robinson, J. A.. 2005a. Institutions as the Fundamental Cause of Long-Run Growth. In P. Aghion and S. Durlauf (eds.) Handbook of Economic Growth. North Holland.
[5] Acemoglu, D., Johnson, S., and Robinson, J. A.. 2005b. The Rise of Europe: Atlantic Trade, Institutional Change and Economic Growth. American Economic Review 95: June, 546–579.
[6] Ali, M. A, and Crain, W.M. 2002. Institutional Distortions, Economic Freedom, and Growth. Cato Journal, Vol. 21, No. 3: Winter, 415-426.
[7] Ali, M. A., and Isse, H. S.. 2003. Determinants of Economic Corruption: A Cross-country Comparison. Cato Journal, Vol. 22, No. 3: Winter, 449-466.
[8] Alon, I., and Chase, G.. 2005. Religious Freedom and Economic Prosperity. Cato Journal, Vol. 25, No. 2: Spring/Summer, 399-406.
[9] Armytage, L. 2003. Pakistan’s Law and Justice Sector Reform Experience – Some Lessons. Paper presented at the 13th Commonwealth Law Conference (14 April 2003). Melbourne.
[10] Asian Development Bank. 2004. Law and Policy Reform at the Asian Development Bank. Asian Development Bank, Manila, Philippines.
[11] Asia-Pacific Economic Cooperation. 2007. APEC Economic Policy Report. APEC Secretariat, Singapore
[12] Berggren, N. 2003. The Benefits of Economic Freedom A Survey The Independent Review, VIII (2): Fall, pp. 193– 211.
[13] Blue, R., Hoffman, R. and Berg, L. A. 2008. Pakistan Rule of Law Assessment – Final Report. Prepared for the USAID/Pakistan by Management System International. Washington D C.
[14] Buscaglia, E. 2000. Law and Economics of Development in Encyclopedia of Law and Economics. Edward Elgar and University of Ghent. Downloaded from: http://encyclo.findlaw.com/0580book.pdf.
[15] Carothers, T. 1998. The Rule of Law Revival. Foreign Affairs, 77 (2): March/April, 95-106.
[16] Chaudhry, I. M. 2007. Keynote Address of Mr Justice Iftikhar Mohammad Chaudhry, Honorable Chief Justice of Pakistan. Downloaded from: http://ljcp.gov.pk/njc/
[17] Cheema, A. 2003. Corporate Governance in Pakistan: Issues and Concerns. The NIPA Journal, 8(2): June, 7-19.
[18] Cheema, A., Bari, F., and Siddique, O. 2003. Corporate Governance in Pakistan: Issues of Ownership, Control and the Law in Sobhan, F., and Werner, E. W. (eds.) A Comparative Analysis of Corporate Governance in South Asia. Bangladesh Enterprise Institute, Dhaka.
[19] Cole, J. H. 2003. The Contribution of Economic Freedom to World Economic Growth, 1980–99. Cato Journal, Vol. 23, No. 2: Fall, 189-198.
[20] Cooter, R. D. 1996. The Rule of State Law and the Rule-of-Law State: Economic Analysis of the Legal Foundations of Development. The Selected Works of Robert Cooter. Available at: http://works.bepress.com/robert_cooter/60
[21] Cross, F.B. 2002. Law and Economic Growth. Texas Law Review, 80 (7): June, 1737-1775.
[22] Dam, K. 2006. Institutions, History and Economic Development. Chicago John M Olin Law and Economics. The Law School, University of Chicago. (Working Paper No. 271.)
[23] Dicey, A.V. 1914. Introduction to the Study of the Law of the Constitution. Oxford. Available at: http://www.constitution.org/cmt/avd/law_con.htm
[24] Djankov, S., Glaeser, E,. La Porta, R., Lopez-de-Silanes, F., and Shleifer, A.. 2003. The New Comparative Economics. Journal of Comparative Economics 31: December, 595-619.
[25] Djankov, S., La Porta, R., Lopez-de-Silanes, F., and Shleifer, A.. 2002. The Regulation of Entry. Quarterly Journal of Economics 117, 1–37.
[26] Djankov, S., La Porta, R., Lopez-de-Silanes, F., and Shleifer, A.. 2003. Courts. Quarterly Journal of Economics 118: May, 453–517.
[27] Easterly, W. 2003. The Political Economy of Growth without Development: A Case Study of Pakistan. In D. Rodrik, ed., In Search of Prosperity: Analytical Narratives of Growth. Princeton, NJ: Princeton University Press.
[28] Easterly, W., and Levine, R. 2003. Tropics, Germs, and Crops: How Endowments Influence Economic Development. Journal of Monetary Economics 50: January, 3–39.
[29] Farr, W.K., Lord, R.A., and Wolfenbarger, J.L. 1998. Economic Freedom, Political Freedom, and Economic Well-Being: A Causality Analysis. Cato Journal, Vol. 18, No. 2: Fall, 247-262.
[30] Feld, L.P. and Voigt, S. 2003. Economic Growth and Judicial Independence: Cross Country Evidence Using a New Set of Indicators. CESifo Working Paper No. 906. CESifo, Munich.
[31] Galal, A. 2004. The Economics of Formalization; Potential Winners and Losers from Formalization in Egypt. Working Paper number 95, Egyptian Centre for Economic Studies
[32] Glaeser, E. and Shleifer, A.. 2002. Legal Origins. The Quarterly Journal of Economic: November, 1193–1229.
[33] Goldsmith, Q.C. 2006. Government and the Rule of Law in the Modern Age. LSE Law Department and Clifford Chance Lecture Series on Rule of Law. Available at http://www.lse.ac.uk/collections/LSEPublicLecturesAndEvents/events/2006/20051214t1509z001.htm
[34] Government of Pakistan. 2009. National Judicial Policy 2009 (Revised Edition). National Judicial (Policy Making) Committee. Secretariat, Law and Justice Commission of Pakistan. Islamabad.
[35] Government of Pakistan. 2006. Report on the Policy Dialogue on Strengthening the Legal Education System. Access to Justice Program. Ministry of Law, Justice and Human Rights. Islamabad.
[36] Government of Pakistan. 2005. Towards a Prosperous Pakistan: A Strategy for Rapid Industrial Growth. Ministry of Industries, Production, and Special Initiatives. Islamabad.
[37] Greif, A. 1989. Reputation and Coalitions in Medieval Trade: Evidence on the Maghribi Traders. The Journal of Economic History 49: December, 857–882.
[38] Greif, A. 1993. Contract Enforceability and Economic Institutions in Early Trade: The Maghribi Trader’s Coalition. American Economic Review 83, 525–548.
[39] Greif, A., Milgrom, P., and Weingast, B. R.. 1994. Coordination, Commitment and Enforcement: the Case of Merchant Guild. Journal of Political Economy 102: August, 745–776.
[40] Greif, A. 2003. Institutions and Impersonal Change: The European Experience. http://www-econ.stanford.edu/academics/greif_228_2005/Greif%202005% 20Impersonal %20Exchange.pdf.
[41] Greif, A. 2005. Commitment, Coercion and Markets: The Nature and Dynamics of Institutions Supporting Exchange. Downloaded from: http://www-econ.stanford.edu/faculty/Greif_Papers/Commitment_Coercion_ Markets.html
[42] Grubel, H. G. 1998. Economic Freedom and Human Welfare: Some Empirical Findings. Cato Journal, Vol. 18, No. 2: Fall, 287-304.
[43] Gwartney, J. and Lawson, R.. 2006. The Path To Development: When Does The Legal Environment Become Critical? Cato Institute Economic Development Bulletin, No. 7: April 10, 1-2.
[44] Hasan, L. 2007. Myths and Realities of Long-run Development: A Look at Deeper Determinants. The Pakistan Development Review, 46 (1): 19-44.
[45] Hasan, L. 2006. Conference Report on Law and Economics. The Pakistan Development Review, 46(1): Spring, 163-167.
[46] Hassan, P. 2007. Environmental Protection, Rule of Law and Judicial Crisis in Pakistan. Paper presented at the International Congress on Environmental Law (22-24 May, 2007), Rio de Janeiro.
[47] Hasan, L. 2006. Conference Report on Law and Economics. The Pakistan Development Review, 45 (1): Spring, 163-167.
[48] Hassan, T. 2000. Legal Framework for Economic Development in Pakistan. Pakistan and Gulf Economist. (No. 50) 31 (11 December 2000).
[49] International Labour Office. 2002. Creating a Conducive Policy Environment for Micro, Small and Medium Enterprises in Pakistan. ILO, Geneva.
[50] Javid, A. and Iqbal, R.. 2007. Relationship Between Corporate Governance Indicators and Firm Value: A Case Study of Karachi Stock Exchange. PIDE Working Paper (14). Pakistan Institute of Development Economics, Islamabad.
[51] Kardar, S. H. 2007. Establishing Property Rights through a Secure System of Land Management. PIDE Policy Viewpoint, No 3 (March). Pakistan Institute of Development Economics.
[52] Kaufmann, D., Kraay, A. and Mastruzzi, M.. 2010. The Worldwide Governance Indicators: Methodology and Analytical Issues. The World Bank Policy Research Working Paper Series 5430. The World Bank. Washington DC.
[53] Kaufmann, D., and Kraay, A.. 2002. Growth without Governance. The World Bank Policy Research Working Paper Series 2928. The World Bank. Washington DC.
[54] Khan, F. S. 2006. Property Rights and Taxonomy of Land Records: A case Study of Lahore. Paper presented at the 22nd Annual General Meeting of the Pakistan Society of Development Economics (19-22 December, 2006). Lahore.
[55] Khwaja, A. I., and Mian, A.. 2005. Unchecked Intermediaries: Price Manipulation in an Emerging Stock Market. Journal of Financial Economics 78, 203-241.
[56] La Porta, R., Lopez-de-Silanes, F., Shleifer, A., and Vishny, R.. 1997. Legal Determinants of External Finance. Journal of Finance 52, 1131–1150.
[57] La Porta, R., Lopez-de-Silanes, F., Shleifer, A., and Vishny, R.. 1998. Law and Finance. Journal of Political Economy 106, 1113–1155.
[58] La Porta, R., Lopez-de-Silanes, F., Shleifer, A., and Vishny, R.. 1999. The Quality of Government. Journal of Law, Economics and Organisation 15, 222–279.
[59] North, D. C. 1990. Institutions, Institutional Change and Economic Performance. New York: Cambridge University Press.
[60] North, D., and Thomas, R. P.. 1973. The Rise of The Western World: A New Economic History. Cambridge University Press.
[61] Norton, S. W. 1998. Poverty, Property Rights, and Human Well-Being: A Cross-National Study. Cato Journal, Vol. 18, No. 2: Fall, 233-245.
[62] Posner, R. 1998. Creating a Legal Framework for Economic Development. The World Bank Research Observer, 13: February, 1-11.
[63] Prokopijevic, M. 2002. Does Growth Further Improve Economic Freedom? Available at: http://www.freetheworld.com/papers/Miroslav_Prokopijevic.pdf
[64] Qazi, M. U. 2006. Computerization of Land Records in Pakistan. A Comparative Analysis of Two Projects from a Human Security Perspective. Downloaded from: http://www.apdip.net/projects/e-government/capblg/casestudies/Pakistan-Qazi.pdf
[65] Rigobon, R. and Rodrik, D.. 2004. Rule of Law, Democracy, Openness, and Income: Estimating the Interrelationships. NBER Working Paper 10750. National Bureau of Economic Research, Massachusetts. http://www.nber.org/papers/w10750
[66] Rodrik, D., Subramanian, A., and Trebbi, F.. 2004. Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development. Journal of Economic Growth 9 (2): June, 131-165.
[67] Ruli, G. 1999. Rule of Law and Economic Growth - How Strong Is Their Interaction? Available at: http://www.nato.int/docu/colloq/1999/pdf/043-047.pdf
[68] Siddique, O. (undated). Simplification and Promotion of Laws and Procedures for Corporatization of Small and Medium Enterprises in Pakistan. A Case Study Conducted for the Ministry of Industries and Production, and Securities and Exchange Commission of Pakistan. Islamabad.
[69] Smith, A. 1776. An Inquiry into the Nature and Causes of the Wealth of Nations (Vol 1and 2, 1981 Reprint). Indianapolis, Liberty Classics.
[70] Stocker, M. L. 2005. Equity Returns and Economic Freedom. Cato Journal, Vol. 25, No. 3: Fall, 583-594.
[71] Stolper, A., Walker, M., Sabatini, C., and Marczak, J.. 2006. Rule of Law, Economic Growth and Prosperity. Report of the Rule of Law Working Group. Americas Society and Council of the Americas. New York.
[72] Summers, R. S. 1999. Some Basic Ways Good Law, Good Legal Institutions, Good Legal Traditions and Principles of the Rule of Law can Augment Markets. IRIS Working Paper No. 227. Center for Institutional Reform and the Informal Sector. University of Maryland, Maryland.
[73] Tures, J. A. 2003. Economic Freedom and Conflict Reduction: Evidence from the 1970s, 1980s, and 1990s. Cato Journal, Vol. 22, No. 3: Winter, 533-542.
[74] Vega-Gordill, M. and lvarez-Arce, J. L. A.. 2003. Economic Growth and Freedom: A Causality Study. Cato Journal, Vol. 23, No. 2: Fall, 199-215.
[75] Voigt, S. 1998. Making Constitutions Work: Conditions for Maintaining the Rule of Law. Cato Journal, Vol. 18, No. 2 (Fall) 1998, 191-208.
[76] World Bank. 2010a. Doing Business. Country Profile for Pakistan. The World Bank and IFC. Washington. www.doingbusiness.org
[77] World Bank. 2010b. Doing Business in Pakistan: Comparing Regulation in 13 Cities and 183 Economies. The World Bank and IFC. Washington. www.doingbusiness.org
[78] World Bank. 2009. World Bank Governance Indicators, accessed on November 29, 2009. http://info.worldbank.org/governance/wgi/index.asp
[79] World Bank. 2009. World Development Indicators, accessed on December 11, 2009. http://data.worldbank.org/data-catalog/world-development-indicators
[80] World Bank. 2005. Corporate Governance Country Assessment – Pakistan: Report on the Observance of Standards and Codes [ROSC]. Downloaded from: http://www.worldbank.org/ifa/rosc_cg_pak.pdf
[81] Watson, P. 2003. The Rule of Law and Economic Prosperity, at: http://www.legalnetlink.net/announcements/speech.pdf
Published
2017-02-11
How to Cite
LUBNA, Hasan. RULE OF LAW, LEGAL DEVELOPMENT AND ECONOMIC GROWTH: PERSPECTIVES FOR PAKISTAN. Journal of Advanced Research in Law and Economics, [S.l.], v. 2, n. 1, p. 48-59, feb. 2017. ISSN 2068-696X. Available at: <https://journals.aserspublishing.eu/jarle/article/view/627>. Date accessed: 17 apr. 2024.

Keywords

Rule of Law, legal development, economic growth