Uncle Sam Wants You, But The Draft Is History

THE FRENCH SYSTEM, INTRODUCED under Napoleon and derived from Roman law, relies on statutes, comprehensive codes, and detailed input from legal scholars. The British system focuses more on decentralized dispute regulation by judges, legal precedent, and voluntary contracts. In earlier research, Shleifer and his co-workers have argued that the differences in legal arrangements explain a lot of the country-to-country variations in economic performance and financial systems. Typically, the researchers found that the French system -and other forms of statute-law systems, namely Germanic and Scandinavian -were inferior to the British one. These results have received enough attention to prompt an official protest by the French executive director of the World Bank. Although I am instinctively appreciative of findings that irritate French public officials, I have nevertheless been skeptical about the empirical results on legal systems. For one thing, France and Britain are currently at similar levels of economic development. So, how could the differences in legal origins be crucial for economic growth?