Judicial Systems and Authoritarian Transitions

A casual link between the judicial system, economic growth, and democracy is a staple of the literature on development policy. Yet the linkage between the judiciary and political liberalisation has been difficult to demonstrate empirically. Legal reforms that are narrowly focused, such as better enforcement of property rights and contract law, enhance trade and investment. Nevertheless, studies are usually unable to substantiate causality between the rule of law, economic growth, and democracy. Our investigation of the political role of the courts during economic transition indicates that the incentives for strengthening the role of courts as a framework for investment and trade, fiscal discipline, and administrative centralisation exist in various political regimes. Autocratic and democratic regimes both require judicial independence for legitimacy but with different effects on political rents, corruption, and aggregate economic activity. The distributional consequences of judicial development exhibit significant variation according to regime type, and there is insufficient evidence to link judicial development with political liberalisation.