Although Africa has been one of the least democratic regions of the world, it has been experiencing widespread pressures for democratic change since 1990. Although pressure-from both domestic civil societies and international donors-has failed to bring about a transition to democracy in most cases, it has succeeded in many. Today, about a third of all African countries are at least electoral democracies, and virtually all regimes in sub-Saharan Africa have at least legalized opposition parties. Conventional political science theories view Africa's democratic prospects as grim because of its extreme poverty and deep ethnic divisions. This essay takes a more hopeful and "developmental" view. It argues that democratic change can occur in Africa and must if it is to develop economically. But this will inevitably involve a long-term process of political and social change and, in particular, institution building. African countries need new, more appropriate, and more effective institutions to control corruption, provide a market-oriented enabling environment for economic growth, and generate incentives for political parties to craft broad multiethnic appeals and constituencies. If institutions of governance, electoral politics, and civil society can be strengthened and innovatively designed, there is hope for democracy in Africa. But this will also require heavy international conditionality and pressure for more responsible policies and more effective institutions, as well as greater international support for those African regimes that appear serious about democracy and good governance. African societies are ready for a new democratic beginning, but they require the right institutional frameworks at home and vigorous engagement of the international community if deeply entrenched patterns of statism, corruption, repression, ethnic exclusion, and violence are to be overcome.

Using a model with a strong track record of predictive accuracy, we posit the unraveling of Kim Jong-Il's hold over power in North Korea. Our analysis suggests that the North Korean military and leaders of heavy industry in North Korea are pivotal powers who control North Korea's destiny over the next few years. We infer from the evidence that Kim Jong-Il's family and the second generation of leaders are opportunists who are likely to break ranks with Kim Jong-Il to secure their own well-being. The result of their anticipated break with Kim Jong-Il is likely to be a slowing of economic reform and of economic openings to South Korea. North Korea is expected to enter a period of political instability that will render Kim Jong-Il little more than a figurehead. Barring strategic efforts by the partisans and some others with credible leverage, North Korea is unlikely to improve its economy or stabilize its government in the next two or three years.

Judicial reform is essential in Latin America today if the domestic and international economic changes that have drawn so much worldwide attention are to succeed. Yet heretofore this aspect of reform has usually drawn only passing attention or none at all in the region and beyond. We believe that this indifference cannot continue because law is the underpinning of true democracy and lasting economic reform, both within individual countries and in foreign relations in the emerging world of competition and interaction among nations. We examine this phenomenon from the combined perspectives of law, economics, political science, and history.

First, we describe the problem--the crisis within the judicial system in Latin America today that may itself precipitate changes that would be difficult or impossible to achieve otherwise. We offer new data on perceptions of the current crisis from within the judicial sectors themselves and societies at large. We touch as well on some nonjudicial factors, ranging from institutional inertia to traditional ways of thought and the quality of political leadership, that affect the role of law in society and that in varying ways promote or impede reform.

Second, we discuss judicial reforms needed today to bring justice to all levels of society by enhancing efficiency and reducing and in time eliminating the predatory role of the state, all of which are present or needed in judicial reforms under consideration or being implemented in varying degrees in Latin America. This part analyzes how factors related to the predatory power of the state--such as "rent seeking" (the bribe culture) and other unofficial activities, conducted by different groups within the public sector--increase the institutional inertia observed during judicial reforms. Our proposals take into account both the expected costs and the benefits of judicial reform for the people in general but also for government officials and politicians, considerations that are essential if reforms are to be drawn up realistically and enacted. In doing so we do not think of judicial reform as an entirely consensual matter but often as the playing off of one self-interested group in the government against another that is too weakened by the current crisis to resist effectively. Thus may the door open to long-term positive reform.

If China is to become an economic superpower in the next century, financial markets will be essential to arbitrage risk. Such markets may fail to develop because of uncertainty over the role of government. Efficient financial markets will require that the Chinese Communist Party reduce its political leverage over economic decisions and decision makers.

Not every newly industrializing country has well-functioning liquid financial markets in which investors can diversify their risks. Nor do all developing countries have efficient legal systems in which a broad range of property rights can be enforced. China, for example, has experienced considerable growth without either liquid financial markets or an efficient legal system by using intermediaries--officeholders who construct broad exchange networks that are based on relationships rather than on formal institutions. The reputation of individual power brokers and the strength of their connection to party power centers provide the system's coherence. The capital requirements for future growth, however, may surpass the capability of these intermediaries, putting the system under severe strain. To overcome this strain, alternative methods of contracting agency relations that will require considerable elaboration of the legal system are needed. A rule- compliant, constitutionally grounded society and economy must be established so that contracts can be maintained independent of the personal authority of power holders. The danger of not acting is a liquidity crisis, intensified by the absence of institutions to reduce risks.