Understanding the link between legal institutions and economic development in poor countries is vital. Developing successful economic policies also depends on considering the impact of legal/judicial institutions on socio-economic interaction.
With the support of empirical studies, Hoover Fellows Edgardo Buscaglia and William Ratliff have filled an important vacuum in the literature on this subject. Their new book, Law and Economics in Developing Countries (Hoover Press, 2000) shows that poverty is in large part the result of laws, judiciaries, and other legal mechanisms that fail the private sector.
In this breakthrough book, Buscaglia and Ratliff concern themselves with identifying the legal institutions that affect economic growth and development in poor countries and advise reforms to address the failures of the institutions.
"We . . . examine the political and economic impact of laws as they are applied and enforced—or not applied and enforced—by court systems and alternative dispute resolution mechanisms," the authors write.
"As market reforms are implemented around the developing world, it is becoming increasingly clear that some of the institutions needed to consolidate the role of the private sector have been neglected."
Eliminating corruption is also a key to reform. Buscaglia and Ratliff identify the factors that foster corruption, and conclude that "systemic corruption is one of the most serious challenges to market reforms and political stability in the developing world."
Edgardo Buscaglia is a fellow at the Hoover Institution and at the University of Virginia School of Law and vice president of the Inter-American Law and Economics Association. His recent publications include Judicial Reform in Latin America: A Framework for National Development (with William Ratliff, Hoover Essays in Public Policy, 1995), "An Efficiency Analysis of the Court Systems" (International Review of Law and Economics, 1997); and "A Quantitative Analysis of Counterfeiting Activities in Developing Countries" (Jurimetrics Journal, 1995).
William Ratliff is a fellow and curator of the Latin and North American collections at the Hoover Institution. His other works include Law and Economics of Development (co-edited Edgardo Buscaglia and Robert Cooter with JAI Press, 1997), and Inside the Cuban Interior Ministry (with Juan Antonio Rodriguez Menier, Jamestown Foundation, 1994).
The Hoover Institution, founded at Stanford University in 1919 by Herbert Hoover, who went on to become the 31st president of the United States, is an interdisciplinary research center for advanced study on domestic and international affairs.