Law and Development

In his manuscript, Lectures on Jurisprudence, based on his lectures at Glasgow University in the early 1760’s, Adam Smith stated that a factor that “greatly retarded commerce was the imperfection of the law and the uncertainty in its application” (Smith, 1978, p.528). This is still one of the main messages of the Law and Economics literature as it pertains to development. Law and Economics is a thriving subject in the US, and it is now being widely adopted in other countries, including in law schools of developing countries. But its Chicago origins and the general American mold may have given a particular slant to the development of the subject, which is not always quite appropriate for these countries. In this essay I shall focus very generally on some of the special issues that arise in the context of developing countries that the literature on Law and Economics needs to address if it is to be applicable there. These special issues arise primarily because the institutional, political and behavioral context in these countries is different from the usual context of the literature.