Third World Quarterly, Vol 22, No 1, pp 21– 36, 2001

Legal reforms and development

KEVIN E DAVIS & MICHAEL J TREBILCOCK

ABSTRACT This paper canvasses the theoretical and empirical literature con-
cerning the role that legal institutions play in development. The Ž rst part
outlines six in uential theoretical perspectives on development and their impli-
cations for the relationship between law and development. The second part
surveys the relevant empirical literature. There is surprisingly little conclusive
evidence that reforms in particular substantive areas of law such as property
law, contract law and human rights law have been effective in furthering
development, however conceived. There is, however, evidence that enhancing the
quality of institutions that enact, administer and enforce laws can have positive
and signiŽ cant effects. This suggests that the current wave of legal reforms must
be situated in a broader agenda of public sector reform if they are to avoid the
problems that led to the demise of the ‘law and development’ movement of the
1960s.

Through much of the 1980s and early 1990s academics and policy makers
interested in development focused on policies that had little or nothing to do
with the legal system. The overriding goals of development policy were
macroeconomic stabilisation, privatisation and ‘getting prices right’. Recently,
however, the focus of attention has shifted to institutions, which Douglas North
(1995) deŽ nes as ‘the rules of the game of a society’. Those rules of the game
include formal legal rules, and consequently the new reform agenda—the
Second-Generation Reforms—is typically understood to include legal reforms.
To the extent that the new agenda includes legal reforms it is premised on the
notion that legal institutions play an independent and signiŽ cant role in develop-
ment. Ironically, just over 25 years ago this notion was discredited and
renounced by scholars who had once been its most ardent proponents (Trubek
& Galanter, 1974). In the light of this historical record we believe that it is
essential to analyse critically the theoretical and empirical bases for current
assertions that legal institutions play an important role in development.
We should mention at the outset that in our opinion this question—what role
do legal institutions play in development?—is merely the Ž rst of three critical
questions that ought to be explored by scholars interested in law and develop-
ment. The second question is: to the extent that law does play a role in
development, why is it that some countries have developed the types of legal
institutions that are conducive to development while others have not? The third
and Ž nal question is: what steps if any can be taken to encourage the emergence

Kevin E Davis and Michael J Trebilcock are both in the Faculty of Law at the University of Toronto, 78 Queen’s
Park, Toronto, Ontario M55 2C5, Canada.

ISSN 0143-6597 print; 1360-2241 online/01/010021-16 Ó 2001 Third World Quarterly

DOI: 10.1080/01436590020022556 21
 KEVIN E DAVIS & MICHAEL J TREBILCOCK

of the legal institutions that facilitate development in countries where those

institutions have not evolved? This paper conŽ nes itself to the initial question on
the premise that, unless there is reason to believe that legal institutions matter,
the other two questions need not be answered.
Our analysis proceeds in two stages. First, we survey some of the theoretical
literature concerning the relationship between law and development. Since the
deŽ nition of development is highly contested, our strategy is to canvass a wide
variety of perspectives on development with a view to identifying claims about
which legal institutions play a role in development and what sort of role they
play. In the second stage of our analysis we examine the extent to which those
theoretical claims are validated by the relevant empirical literature.

Theoretical perspectives on law and development

The following sections outline six theoretical perspectives on development and
the insights that each purports to yield about the relationship between law and
development. In our view each of these perspectives has been particularly
in uential in that each has not only shaped thinking about development in
general but has also been adopted—either explicitly or implicitly—by scholars
who have made theoretical claims about the relationship between law and
development.

Modernisation theory
Modernisation theory deŽ nes development as a process of convergence on the
institutions of developed Western societies. On this view underdevelopment is
both caused by and re ected in traditional as opposed to modern institutions. The
deŽ nitive modern institutions are free markets, a bureaucratic welfare state, a
multiparty electoral system and civil and political rights. This understanding of
development, whose antecedents lie in the writings of Max Weber, implicates a
wide range of legal institutions, including property law, commercial law, human
rights law and administrative law. It also suggests that it is important to have a
competent and independent judiciary to uphold the rule of law. More generally,
this perspective implies that the process of development can be hastened by
transplanting legal institutions from developed Western countries to less devel-
oped countries (Trubek, 1972; Trubek & Galanter, 1974).

Dependency theory
By way of reaction to modernisation theorists, dependency theorists reject the
notion that different countries should be expected to experience similar forms of
development. Instead they argue that development in many less developed
countries is inevitably conditioned by the fact that it occurs in the context of
complex economic, political and cultural relationships with developed countries
(Cardoso & Faletto, 1979; dos Santos, 1970, 1973; Frank, 1966, 1969, 1972;
Amin, 1974). Consequently, legal scholars in uenced by dependency theory tend
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to be relatively sceptical of the merits of relying on legal institutions transplanted

from developed countries to promote development in less developed countries.1
Indeed, many scholars in uenced by this perspective are sceptical that law
reform, in the absence of radical political reform, is likely to have any signiŽ cant
impact on a country’s development prospects (Snyder, 1980). However, to the
extent that law is seen as an instrument for political and social change,
dependency theorists would emphasise its redistributive potential. SpeciŽ cally,
many dependency theorists advocated the replacement of capitalist forms of
development with socialist ones. Socialist reform agendas emphasise redistribut-
ing real property and reforming oppressive land tenure regimes; promoting
worker ownership and governance of private enterprises; and constitutionally
enshrining economic and social rights such as rights to education, health
services, food, housing, employment and income (see eg Amin, 1990; Pollis,
1981).

Economic growth
One of the most prominent of all contemporary perspectives on development is
deŽ ned by its focus on policies that promote aggregate economic growth. Within
this broad class of theories there is considerable diversity concerning the role of
the state and formal legal institutions. Early growth theorists adopted the view
that market failures were endemic in developing countries and assigned a large
role to the state in transforming the economic structure of these economies. More
recently neoclassical or neoliberal theories of economic growth have advocated
a dramatic shrinkage in the role of the state and a corresponding increase in the
role of markets. An intermediate position is taken by proponents of the so-called
‘New Institutional Economics’ who view the state and the institutions that
comprise it as endogenous to the development process, and view the design and
functioning of institutions as critical determinants of countries’ development
prospects (North, 1995). The current consensus seems to be that certain legal
institutions are particularly conducive to economic growth, namely, well deŽ ned
and alienable private property rights; a formal system of contract law that
facilitates impersonal, non-simultaneous contracting; a corporate law regime that
facilitates the capital investment function; a bankruptcy regime that induces the
exit of inefŽ cient Ž rms and rapid redeployment of their assets to higher valued
uses; and a non-punitive, non-distortionary tax regime (Olson, 1999; Posner,
1998, Stiglitz, 1999). An effective criminal justice system is also conducive to
economic growth because high crime rates tend to deter investment and deplete
both human capital and governmental capacity. For example, a recent study
suggests that the high homicide rates that Columbia has experienced since the
late 1980s are costing about two percentage points annually in the rate of growth
of gross domestic product (Ayres, 1998). These policy prescriptions have
implications for the way in which law is applied as well as the content of legal
rules because it is widely agreed that, in order to facilitate private investment and
exchange, laws must be administered and enforced in a predictable, timely and
low-cost manner (Shihata, 1997).
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 KEVIN E DAVIS & MICHAEL J TREBILCOCK

Welfarism
Welfarist perspectives on development challenge the premise of growth-oriented
theories of development that conventional measures of economic growth capture
all important aspects of human well-being. In particular, welfarist proponents
claim that measures of GNP or GDP per capita do not capture inequalities in
wealth in general or more speciŽ c inequalities such as those relating to women
or ethnic minorities. Aggregate measures of income or wealth also fail to capture
other instrumental and non-instrumental dimensions of human well-being such
as health and educational status and political and economic freedoms (Sen,
1999). The legal implications of this perspective have not yet been explored in
any detail. It is reasonably clear, however, that adopting this perspective means
giving priority to various substantive areas of law such as a progressive tax
policy, redistributive property tax regimes, social welfare policy, and civil and
political rights. From a welfarist perspective institutional reforms that serve to
reduce levels of violent crime also merit particular attention, since the fear of
violence can signiŽ cantly impair the quality of life in ways that are not fully
captured by economic variables.

Feminism
Feminist perspectives on development have evolved over time. Initially the
emphasis was on ensuring that women performing their traditional functions in
developing societies obtained adequate access to public services such as health
care and food subsidies. The next stage in the evolution of feminist thinking
about development resulted in an emphasis on policies that facilitate the
integration of women into the economic system, for example by combating
gender-based discrimination. Variants of this approach place different degrees of
emphasis on using economic integration to facilitate poverty reduction, reduction
of inequality and economic growth. More recently feminists have paid attention
to factors that affect the overall well-being of women, taking into account their
experiences in both public and private spheres and the perceived need to
challenge established gender roles. Contemporary feminists also tend to empha-
sise promotion of self-empowerment and bottom-up rather than top-down
policies (Moser, 1993).
In LDCs feminists have devoted considerable attention to family law, property
law, employment law, criminal law and human rights law. The focus on family
law is derived from the concern with improving the quality of women’s private
as well as their public lives by, for example, increasing their rights to economic
support from their spouses in the event of marital breakdown. As far as property
law is concerned, feminists are primarily concerned with reversing the effects of
both formal and informal legal rules that limit women’s rights to own and inherit
land. Labour and employment law demands attention to the extent that laws
governing discrimination, sexual harassment, the provision of child-care facili-
ties, parental leave, and part-time work affect women’s abilities to combine
child-rearing with participation in the workforce. The criminal justice system can
contribute to reducing various forms of violence against women, including
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 LEGAL REFORMS AND DEVELOPMENT

domestic violence, rape, genital mutilation and trafŽ cking in women. Entrench-
ing rights to gender equality in human rights laws can serve to provide a legal
basis for challenging all sorts of public policies that unjustly reduce women’s
quality of life, including limits on reproductive freedom. Finally and more
generally, the overarching goal of empowering women demands that they be
given meaningful roles in legislative, administrative and adjudicative processes.

Sustainable development
The prevailing understanding of sustainable development emphasises causal
relationships between environmental quality and the well-being of both present
and future generations of human beings. SpeciŽ c relationships between the
environment and health status have been identiŽ ed, as well as relationships
between poverty alleviation and enhanced environmental quality (World Bank,
1992). Environmentalists have also drawn attention to the ways in which
collective action problems and scientiŽ c uncertainty can thwart sustainable
development (Hardin, 1968; Gelpe & Tarlock, 1974).
Concern about sustainable development dictates the adoption of legal rules
that restrict pollution and promote conservation. Furthermore, in order to
mitigate collective action problems this perspective would advocate the adoption
of legal institutions that ensure that the widest possible range of interests is
considered in the formulation of rules that in uence human interactions with the
environment. In addition, in appropriate cases special attention should be paid to
the views of people whose well-being is closely tied to that of a particular
ecosystem. As a result, this perspective has important implications for public
international law, constitutional law, administrative law, civil procedure and
property law, which in their traditional forms may or may not assign the power
to instigate, make and enforce environmentally signiŽ cant decisions to those
who have appropriate interests or expertise.

Empirical analysis of the relationship between law and development

Our brief survey reveals that many of the most in uential theoretical approaches
to development can be interpreted to include claims about the appropriate design
of legal institutions. Moreover, each of these perspectives on development
involves many scholars who believe that legal institutions can play an indepen-
dent instrumental role in achieving development.2 This leads us to inquire: what
evidence exists to support that belief?
At the beginning of this article we indicated that the recent interest in the
relationship between law and development is not without precedent. In the 1960s
and early 1970s interest in law and development  ourished. By 1975, however,
the law and development movement had been declared a failure by some of its
leading Ž gures. Their overall conclusion was that reform of formal legal
institutions had little or no effect on social or economic conditions in developing
countries (Trubek & Galanter, 1974). To a certain extent the movement’s decline
can be traced to unique historical factors such as the American civil rights
movement and the Vietnam War. It is also important to keep in mind that the
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 KEVIN E DAVIS & MICHAEL J TREBILCOCK

original law and development movement drew its theoretical inspiration from
modernisation theory. Therefore, we should be cautious about drawing infer-
ences about the validity of the claims about legal institutions that are associated
with other perspectives on development. Nonetheless, this relatively recent
historical experience suggests that we must seriously confront the possibility that
the new law and development movement is destined to meet the same fate as its
predecessor.
Recent empirical analyses of the relationship between law and development
do not allow us to reject this possibility out of hand. We divide those analyses
into two broad categories. The Ž rst category comprises cross-country studies that
examine the effects on development of several variables, including ‘legal’
variables that are derived by aggregating the characteristics of a number of legal
institutions. The second category comprises smaller-scale studies of the in uence
of speciŽ c legal reforms.

Aggregate studies
The large-scale highly aggregated studies can be further sub-divided into two
groups. One group of studies examines the relationship between law, administra-
tion and development, essentially by examining the impact of factors such as the
quality of the bureaucracy, level of corruption, likelihood of government
repudiation of contracts, risk of government expropriation, and overall mainte-
nance of the rule of law on economic development. Most studies Ž nd that these
factors signiŽ cantly in uence levels of income and rates of growth and invest-
ment (Barro, 1997; Berkowitz et al, 1999; Clague et al, 1997; Kaufman et al,
1999, World Bank, 1997), although some believe that studies of this type suffer
from a number of methodological problems (Messick, 1999). Another interesting
Ž nding is that common law countries have experienced faster economic growth
than civil law countries in recent decades (Mahoney, 2000).
A second group of studies examines the relationship between law-making
institutions and development, in particular the relationship between democracy
and economic growth. These studies yield much more mixed results, with some
Ž nding that democracy promotes economic growth, others Ž nding that it reduces
economic growth, and yet others Ž nding that it has no statistically signiŽ cant
impact (Przeworski & Limongi, 1993; Barro, 1997).
These cross-country studies go some way towards rebutting the claim that
legal institutions are epiphenomenal. It is important to emphasise, however, that
most of these studies use economic growth as the dependent variable and neglect
other dimensions of human well-being that are highlighted by several of the
theoretical perspectives reviewed above (Kaufman et al, 1999 is an exception).
In addition, the variables that these studies use to represent the characteristics of
legal institutions do not shed much light on which types of legal institutions play
the most important roles in development, whether measured in terms of econ-
omic growth or otherwise. The fact that the quality of bureaucracy and levels of
corruption are signiŽ cant determinants of growth rates suggests that as a general
matter the way in which law is administered is important. However, these
Ž ndings do not shed any light on which if any substantive bodies of law are
26
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important. Also unhelpful in this regard are statements along the lines that
overall levels of respect for the rule of law are statistically signiŽ cant determi-
nants of growth rates.

Studies of reforms in speciŽ c areas of substantive law

In order to explore the role that particular legal institutions play in development
we must turn to the second category of studies, the relatively Ž ne-grained
analyses of reforms to speciŽ c legal institutions. In many substantive areas of
law these studies have yielded at best mixed results.
One of the best ways to illustrate the inconclusive nature of the empirical
literature on law and development is by canvassing the literature on property
rights. Property rights play a central role in virtually all theories of development.
Modernisation theorists tend to regard the presence of a legal regime that
enshrines rights to private property as a characteristic feature of a modern
society. Development economists regard well deŽ ned and freely alienable
property rights as essential methods of ensuring that individuals both have
adequate incentives to invest in property and are able to transfer property to
those who value it most highly. Meanwhile, for those whose vision of develop-
ment entails redistribution of wealth and power in society, redistribution of
property rights, and in particular rights to real property, seems to offer a natural
method of achieving their goals.
A number of empirical studies have been conducted on the economic effects
of the formalisation of title to land; individualisation (and formalisation) of title
to land held under communal tenure and reforms designed to enhance the
alienability of property. With respect to titling projects, the empirical evidence
on their impact on incentives to invest in the acquisition or improvement of real
property is mixed (see eg Place & Hazell, 1993; cf Alston et al, 1996). In the
speciŽ c context of settlement upgrading projects some studies suggest that the
provision of complementary government services to land holders may be at least
as important in enhancing these incentives as titling (Varley, 1987; Razzaz,
1993). With respect to reforms designed to facilitate the privatisation of land
held under customary tenure and the alienation of land, the evidence concerning
the impact on productivity is mixed. These reforms also do not always have a
dramatic effect on patterns of land dealings or land holdings; customary patterns
of landholding and alienation often prove to be stubbornly persistent (Cornelius
& Myhre, 1998; Platteau, 1996).
Taken as a whole these empirical studies fall well short of validating the
claims that modernisation theorists and growth-oriented economists tend to make
about the merits of formalised, individualised and freely alienable property
rights. The evidence also suggests that property regimes of this sort are
problematic from a number of other theoretical perspectives. For instance,
while titling may reduce risk and transaction costs for some categories of people,
it may simultaneously create new uncertainties for other groups that rely
on customary or informal practices and rules to establish and safeguard their
land claims. That is, certain sections of local populations face a serious risk
of being denied legal recognition of their customary rights to land during
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 KEVIN E DAVIS & MICHAEL J TREBILCOCK

the registration process. This is especially true of women, pastoralists, casted

people and other groups who have traditionally enjoyed usufructuary rights to
land (Platteau, 1996).
The empirical literature not only casts doubt on the merits of the kinds of
property law reforms advocated by modernisation theorists and theorists of
economic growth. The experience of the past three or four decades also casts
doubts on the efŽ cacy of the types of land redistribution programmes that might
be regarded as the logical extensions of welfarism and dependency theory.
Following World War II Japan, Taiwan and South Korea embarked upon
ambitious and generally successful land redistribution programmes that both
enhanced agricultural productivity and reduced inequalities of wealth. However,
in many other developing countries land redistribution programmes have proven
much less successful, in large part because of the disproportionate in uence of
landed and other political elites in the formulation and administration of these
redistributive programmes and other aspects of agrarian policy (Prosterman et al,
1990). This experience calls into question the feasibility of using property law
instrumentally to achieve any goals that run contrary to the interests of dominant
groups in a developing society.
The empirical literature on the importance of contract law is not much more
conclusive than the literature on property rights. There is strong evidence that
predictability on the part of the judiciary is positively associated with growth and
investment (Brunetti et al, 1998, World Bank, 1997). It is unclear, however, to
what extent this means that predictable enforcement of contractual as opposed
to other rights is important. A number of studies have documented the extent to
which Ž rms in LDCs where judicial enforcement of contracts is unreliable use
informal techniques such as relational contracting to avoid being harmed by
breach of contract (Fafchamps & Minten, 2000, Bigsten et al, 2000; McMillan
& Woodruff, 1999). However, there has been little analysis of the economic
effects of encouraging Ž rms to abandon these informal techniques by improving
the reliability of judicial enforcement. The most useful study we have found
comes from a transition economy, Russia, where Hendley et al (1999) found that
enterprises that invest in legal expertise tend to have more successful transac-
tions. On the other hand, the Japanese experience suggests that it is possible for
a country in which commercial actors do not rely extensively upon judicial
enforcement of contracts to sustain high levels of economic growth and develop-
ment (Pistor & Wellons, 1999: 215– 248). It is worth noting that even some
economists have suggested that the welfare effects of improving judicial enforce-
ment of contracts may not be positive. In principle it is possible for imperfect
judicial enforcement to undermine relational contracting without signiŽ cantly
enhancing Ž rms’ ability to engage in non-relational forms of contracting (Grief,
1997; McMillan & Woodruff, 1999).
A third area in which empirical analysis calls into question the potential
effectiveness of legal reform is human rights law. Modernisation, welfarist and
feminist perspectives on development all place considerable emphasis on consti-
tutionally enshrining protection for civil and political rights. However, in many
developing nations violations of constitutionally protected human rights are
commonplace, in part because courts are unwilling to risk antagonising the
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executive and legislative branches of government (Cornell & Roberts, 1990;

International Human Rights Law Group, 1990). According to one of the few
rigorous empirical studies in this Ž eld, countries that provided constitutional
protection for one particular right, the right to be free from unreasonable search
and seizure, were scarcely more likely to protect this right than were other
countries (Cross, 1999). It is possible to point to cases in which judges have been
willing to enforce human rights legislation. For instance, the Indian Supreme
Court has staunchly defended fundamental human rights from incursions by the
executive and legislative branches of the government (Bhagwati, 1985; Cooper,
1993). Similarly, the Namibian Supreme Court has disallowed arbitrary ofŽ cial
actions, struck down infringements on freedom of the press and even found the
Namibian system of apartheid unconstitutional (Bjornlund, 1990). Overall,
however, the real-world signiŽ cance of constitutional reforms is unclear.
We do not mean to convey the impression that there is no evidence to support
the effectiveness of any speciŽ c legal reform. There is deŽ nitely evidence to
suggest that some reforms might have an impact on development. For example,
in the area of commercial law, using a cross-country multiple regression analysis
Levine has found that countries which give a high priority to secured creditors
receiving the full present value of their claims have both better developed
Ž nancial intermediaries and higher rates of economic growth (Levine, 1999).
Interestingly, these Ž ndings imply that economic objectives might con ict with
redistributive objectives in the design of insolvency laws in LDCs. This is because
rules that subordinate the claims of workers and the government to those of
secured creditors probably serve to redistribute wealth away from those con-
stituencies and towards secured creditors. This may not be the kind of redistribu-
tion of wealth that is required to promote some non-economic forms of
development.
Cross-country research in other areas is also beginning to yield potentially
useful results. For example, Barth et al (1999) have provided preliminary results
showing that countries restricting the securities activities of banks have
signiŽ cantly higher probabilities of suffering a banking crisis than countries with
less restrictive regulatory practices. Further research in this area is critical
because banking crises are horrendously costly—some recent crises have cost
countries over 10% of GDP to resolve (The Economist, 1997; Barth et al, 1999).
There are also microlevel analyses suggesting that speciŽ c reforms can
in uence certain aspects of development. For example, there have been a
number of successful experiences with tax reform. Such reforms are particularly
important from a welfarist perspective because the taxation system is the primary
mechanism that a state can use to redress inequalities of wealth. These reforms
were inspired in part by the fact that, although many developing countries have
nominally progressive income tax systems, the actual incidence of taxation is
often not signiŽ cantly progressive. This is in part because income tax represents
only one component of the tax system; in part because nominal income tax rates
are eroded by the presence of a large number of exemptions; in part because of
massive tax evasion; and in part because of bracket creep caused by in ation
(Thirsk, 1997). These problems have led to proposals favouring a ‘levelling-up’
approach to tax reform. This entails reducing the progressivity of income tax
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 KEVIN E DAVIS & MICHAEL J TREBILCOCK

rates while simultaneously raising basic exemptions so as to drop the least

well-off from the tax rolls. Countries that have implemented reforms along these
lines appear often to improve revenue collections while also having a modest
effect on poverty alleviation (Gillis, 1989; Thirsk, 1997).
Minimum wage legislation has also proven to be effective on occasion. For
instance in the Ž rst half of the 1990s the real minimum wage in Indonesia
doubled. Rama found that compliance was far from perfect but that there was a
clustering in the distribution of wages around the minimum wage, indicating that
the law did have an effect (Rama, 1996).3 But of course for every example there
is a counter-example. In a study of Costa Rica, Gindling and Terrell (1995)
found that at least one-third of workers covered by minimum-wage legislation
were earning less than the legal minimum, and even in uncovered sectors of the
economy almost the same proportion were earning less than the legal minimum.
It is also important to keep in mind that the effects of minimum-wage legislation
on the welfare of the least well off in society are debatable. The beneŽ ts of
higher wages for employees may be offset by the costs of reduced levels of
employment.
Finally, there has also been some success in reforming family law, an area that
is of particular interest to feminists. Charrad (1994) reports that Tunisia’s 1956
reforms had a meaningful and positive impact on the status of women. Among
other things, the Personal Status Code made it more difŽ cult for men to divorce
their wives unilaterally without providing support, gave women the right to
initiate divorce, and made both spouses equally eligible to obtain custody of
children. Charrad reports that women’s chances of obtaining custody of their
children upon divorce increased dramatically. However, she notes that the
impact of the reforms concerning the initiation of divorce has been limited by
the fact that women’s chances of obtaining adequate levels of Ž nancial support
after divorce remain slim (Charrad, 1994). In other countries the impact of
family law reforms on the status of women appears to have been less signiŽ cant,
mainly because women are often poorly informed about their formal legal rights
and Ž nd the formal courts inaccessible and alienating (Armstrong, 1992).

The importance of enforcement and administration

Many of the studies reviewed above examine either the effects of reforming only
substantive legal rules or the effects of reforms that combine changes in
substantive rules with changes in the institutions responsible for enforcing or
administering these rules. As we have attempted to show, studies of this sort
have generally yielded inconclusive results. Nevertheless, we are not prepared to
discard the notion that legal institutions play an important role in development.
In many areas further research is required before such a pessimistic conclusion
can be drawn. Moreover, in our view the available evidence supports the notion
that reforms designed to improve the enforcement and administration of laws are
likely to achieve positive and signiŽ cant results.
This latter claim is consistent with the aggregate studies that have emphasised
the connection between the quality of bureaucracy and economic growth (Barro,
1997) and World Bank-sponsored research on the importance of predictable
30
 LEGAL REFORMS AND DEVELOPMENT

judicial enforcement (World Bank, 1997; Brunetti et al 1997). It is also

consistent with Mahoney’s (2000) hypothesis that differences in levels of
judicial independence are part of the reason why countries with a common law
background have experienced faster rates of economic growth than countries
with a civil law background. We also take comfort in the fact that this view is
borne out by several more Ž ne-grained analyses of speciŽ c institutions.
For instance, many developing countries have experienced high levels of tax
evasion and corruption in tax administration and collection. These phenomena
are problematic from virtually any perspective. Fortunately, there is evidence
that certain types of administrative reforms can be effective. Countries that have
privatised the Ž ling of returns and processing of payments (eg by utilising local
banks); facilitated the solicitation of information from third parties (such as
banks); more widely utilised computer systems in processing tax reforms and
targeting enforcement efforts; and adopted incentive measures for remunerating
tax collection ofŽ cials by providing them with some percentage of taxes
collected have all had signiŽ cant and positive impacts on levels of tax evasion
and corruption (Silvani, 1992; Silvani & Radano, 1992).
Another area in which the potential for useful administrative reforms seems
great is the area of social welfare legislation. Social security programmes in LDCs
have typically not focused on legal entitlement programmes like the social
assistance and social insurance programmes prevalent in the developed world.
Although many LDCs have enshrined rights to healthcare or education in their
constitutions, these guarantees are rarely justiciable, 4 and so existing healthcare,
education and food subsidisation programmes typically do not create legal
entitlements. 5 Instead social welfare programmes in LDCs typically consist of
direct provision of goods such as health care and education and subsidisation of
foodstuffs. There is considerable evidence that these types of programmes both
reduce poverty and promote economic growth (World Bank, 1990, 1993). On the
other hand, there is also evidence that in many developing countries these and
other social welfare programmes are often poorly targeted and fail to reach the
segments of the population who would beneŽ t most substantially from them. The
neglected groups usually include residents of rural areas, self-employed and
temporary workers and the very poor (World Bank, 1990, 1993; Midgley, 1984).
These problems often have little to do with legal institutions; they are usually
caused either by poor design or lack of Ž nancial resources. Under the circum-
stances, further research on ways to improve the targeting of public beneŽ ts
seems more worthwhile than research on the legal aspects of social welfare
policy.
A similar point can be made about the relationship between legal institutions
and the environment. In recent years many developing countries have adopted
fairly stringent environmental legislation. In many countries there is even a
constitutional obligation to protect the environment. Generally speaking, how-
ever, environmental problems in developing countries seem to be getting worse
not better and one of the main reasons is because existing environmental
legislation is often poorly administered and enforced (The Economist, 1998). For
example, Brazil’s Constitution gives the Attorney General the right to initiate
inquiries and judicial actions to protect the environment. Yet, as of mid-1997,
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 KEVIN E DAVIS & MICHAEL J TREBILCOCK

there had been no cases of judicial actions against the country’s extensive illegal
trade in fauna (de Aragão & Bunker, 1998). In Cameroon, as of 1998 it was
widely reported that logging concessions were being issued in contravention of
established land-use criteria; for example, they were being given inside national
parks and forest reserves. UnderstafŽ ng and widespread corruption in the
Department of Wildlife have also crippled Cameroon’s efforts to enforce
legislation against poaching and smuggling of wildlife (Blaikie & Simo, 1998).
Again, the moral seems to be that the most critical reforms are those that address
defects in the enforcement and administration of law as opposed to the content
of substantive legal rules.
This message is also consistent with the relatively scarce evidence concerning
the relationship between legal institutions and protection of human rights. In a
study mentioned earlier in this paper, Cross (1999) found that the existence of
a constitutional guarantee of freedom from unreasonable search and seizure had
no impact on the actual level of protection from unreasonable search or seizure.
However, Cross also found that the level of judicial independence was a
signiŽ cant determinant of the actual level of protection in countries with no
express constitutional protection. Again this suggests that attention must be paid
to the institutions responsible for enforcing and administering laws as opposed
to the substantive laws themselves.
Finally, another area in which differences in substantive law seem less
signiŽ cant than differences in administration and enforcement is in the criminal
justice system. Although there may be some differences in the treatment of
violence against women, we suspect that most legal systems contain roughly
equivalent criminal prohibitions against the use of violence and actions such as
theft and vandalism. The signiŽ cant differences in levels of criminality across
societies are largely driven by factors such as differences in macroeconomic
variables and differences in levels of income inequality, factors that are not
directly related to the characteristics of legal institutions (Fajnzylber et al, 1998).
Moreover, to the extent that crime levels are in uenced by institutions, improve-
ments in the effectiveness of the police and the courts can be presumed to play
a more signiŽ cant role than changes in substantive legal rules.

Conclusions
In this brief survey we have attempted to highlight the fact that, despite the
resurgence of interest in reforming legal institutions as a means of pursuing
development, there is a great deal of room for debate about the relationship
between legal reforms and development.
The debate begins at the theoretical level. Different perspectives on develop-
ment generate different claims about both which legal institutions are important
in the development process and how those institutions ought to be reformed to
induce or facilitate development. Our brief review of the theoretical literature
only allows us to hint at the potential con icts between the prescriptions
associated with different theoretical perspectives.
The utility of many legal reforms can also be challenged on empirical
grounds. In recent years a number of scholars and commentators have vigorously
32
 LEGAL REFORMS AND DEVELOPMENT

advocated reforms to property rights, contract law, and political and civil rights.
Interestingly enough though, there is little conclusive evidence that reforms in
these areas have been effective in furthering development, however conceived.
Further empirical research on these topics is clearly warranted. In the meantime
however, we tentatively conclude that, as far as legal reforms are concerned,
developing countries should not focus exclusively on enacting or adopting
appropriate substantive bodies of law or regulation designed to vindicate the
particular conception of development that motivates them. Rather, the empirical
evidence suggests that it is appropriate to emphasise reforms that enhance the
quality of institutions charged with the responsibility for enacting laws and
regulations, and institutions charged with the subsequent administration and/or
enforcement of those laws or regulations.
The evidence reviewed in this study suggests that effective access to the
courts for individuals and groups of citizens, and the integrity, competence and
independence of the formal criminal and civil courts systems, as well as
adequate stafŽ ng and resourcing of them, is a major problem for many develop-
ing countries. However, we also believe that an exclusive or predominant
preoccupation with the court system inappropriately discounts the important role
played by government departments and agencies, the police and specialised
administrative or regulatory bodies in the administration and enforcement of
laws. In fact, the challenge facing many developing countries in upgrading the
quality of their legal systems is far more daunting than simply reforming their
civil and criminal court systems, and is likely to reach deep into the domain of
government or public administration more generally. In this sense, the relation-
ship between law and development is likely to elide, to a signiŽ cant extent, with
the relationship between public sector institutions and development more gener-
ally rather than being a discrete focus of reform. This suggests that the current
wave of legal reforms must be situated in a broader agenda of public sector
reform if these are not to suffer the same fate as the reforms inspired by the
original law and development movement.
Perhaps this is one of the most important lessons that can be drawn from the
failure of the earlier law and development movement—legal institutions do not
play a wholly autonomous role in development; their effectiveness is contingent
upon the effectiveness of a number of other institutions.

Notes
This essay is adapted from a paper presented at a Conference on Second Generation Reforms sponsored by
the International Monetary Fund, 8– 10 November 1999, Washington, DC. We thank William Holder and other
participants in that conference for their comments. We are grateful for the invaluable research assistance of
Nicholas Adamson, Alejandra Flah, Jonathan Gupta, Nora Flood, Pei Ching Huang and Bianca La Neve. All
errors and omission are our own.
1
This notion is supported by Berkowitz et al (1999) who Ž nd that countries that have developed legal orders
internally, adapted transplanted law to local conditions, and/or had a population that was already familiar
with the basic legal principles of the transplanted law have more effective legal institutions than other
countries.
2
Even scholars in uenced by dependency theory seem to agree that some legal institutions, such as those

33
 KEVIN E DAVIS & MICHAEL J TREBILCOCK

providing for democratic elections, can play a transformative role in society. See, for example, Viera-Gallo
(1972).
3
In the absence of an effective minimum wage law, or in the case where the minimum wage was set so low
as to be otiose, one would expect a relatively smooth distribution. An effective law, on the other hand,
would raise the wages of some to the minimum and, perhaps, eliminate some jobs below the minimum
through layoffs, thereby creating a cluster around the minimum wage.
4
For example, Part II, section (1) of the constitution of Tanzania reads as follows:

The state shall, within the limits of its economic capacity and development, make adequate provision for
securing the right to work, education and public assistance in cases of old age, sickness and disablement,
and in other cases of undeserved want. Subject to those rights, the state shall make provisions ensuring
that every person earns his livelihood.

However, article 7 of the constitution speciŽ es that these rights are not justiciable. (Quoted in Mgongo
(1998) pp 72– 73.
5
Although we have categorised food subsidy programmes as social welfare policies that do not create legally
enforceable entitlements, the distinction between legally enforceable welfare programmes, and mere social
welfare policies is difŽ cult to draw with precision. Targeted food subsidy programmes, for instance, often
do create a legal entitlement for certain portions of the population to shop in ration outlets. However, this
entitlement is not the same as a justiciable entitlement to food. If a ration shop happens to be out of stock,
there is no legal recourse.

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