Reform of the Legal, Regulatory and Judicial Environment: What Importance forDevelopment Strategy

摘要

The paper discusses the ways in which legal, regulatory, and judicial (LRJ)systems affect resource allocation and entrepreneurial initiative in poor countries. Phenomena that cause the LRJ environment systems to impede economic efficiency are identified, and options for reform are examined. Attention focuses initially on three pillars of the legal system that underlie every market economy, namely, security of private property, enforcement of contracts, and assignment of liability for wrongful damage. Next, the document discusses supplemental categories of business law that facilitate the creation and funding of institutions necessary for efficient production and distribution of many goods and services. Six common means of business regulation that present options for removing obstacles to efficiency are reviewed: licensing and concessions; regulation of labor, the financial market, and prices; control of restrictive business practices; and official conflicts of interest. The paper concludes by examining the functioning of the institutions that determine how the LRJ system operates in practice.