Law and Long-Term Economic Change: A Eurasian Perspective

Law and Long-Term Economic Change: A Eurasian Perspective

Law and Long-Term Economic Change: A Eurasian Perspective

Law and Long-Term Economic Change: A Eurasian Perspective

Synopsis

Recently, a growing body of work on "law and finance" and "legal origins" has highlighted the role of formal legal institutions in shaping financial institutions. However, these writings have focused largely on Europe, neglecting important non-Western traditions that prevail in a large part of the world. Law and Long-Term Economic Change brings together a group of leading scholars from economics, economic history, law, and area studies to develop a unique, global and, long-term perspective on the linkage between law and economic change.

Covering the regions of Western Europe, East and South Asia, and the Middle East, the chapters explore major themes regarding the nature and evolution of different legal regimes; their relationship with the state or organized religion; the definition and interpretation of ownership and property rights; the functioning of courts, and other mechanisms for dispute resolution and contract enforcement; and the complex dynamics of legal transplantations through processes such as colonization. The text makes clear that the development of legal traditions and institutions- as embodiments of cultural values and norms- exerts a strong effect on long-term economic change. And it demonstrates that a good understanding of legal origins around the world enriches any debate about Great Divergence in the early modern era, as well as development and underdevelopment in 19th-20th century Eurasia.

Excerpt

Debin Ma and Jan Luiten van Zanden

“Legal Origin”: A Global Perspective

Property rights and contract enforcement lie at the heart of sustainable economic growth. During the past decade, our understanding of the historical evolution of various institutional mechanisms to cope with this issue has been greatly enhanced by the voluminous research under the broad category of new institutional economics. the research demonstrates that these mechanisms, whether informally organized through repeated interaction of economic agents or formally institutionalized in a statebacked legal system, were central to the securing of property rights and contract enforcement (see, for example, North, 1981; Acemoglu et al., 2001, 2005; and Greif, 2006).

The importance of formal law and legal institution to economic growth has long been noted. the unique features of legal formalism and rule of law embedded in Western law—as argued by Max Weber—have laid the foundation of Western capitalism (Trubek, 1972). the role of law in economic growth resurfaced in recent scholarship on economic growth as exemplified by the highly influential debates on law and finance (La Porta et al., 1998, 1999) and legal origins (Glaeser and Schleifer, 2002). Yet curiously, in this new law and growth literature, the old Weberian interest in legal traditions around the world had largely been forsaken for a much narrower focus on Western European legal regimes only, namely, common versus civil laws. the widely popular exercise of cross-country growth regressions— cross-country intended to cover most, if not all, the countries—reduces the . . .

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