Aims & objectives
This project had the following aims:
- To analyse how far law and legal institutions can promote economic growth in the BRICS countries (‘rising powers’) and other emerging markets.
- To analyse processes of legal and institutional reform in relation to financial markets and corporate governance in transition systems and emerging markets.
- To identify how far under-development of formal legal institutions is posing a barrier to future growth in transition systems and emerging markets.
The transition of former socialist countries to market-based forms of economic ordering over the past two decades provides an unprecedented opportunity to study the relationship between legal institutions and economic development. In the early 1990s there was a broad consensus among economists that legal institutions had played a critical role in fostering economic growth in the west, and would do so in future in transition systems and other emerging markets. Two decades on, transition systems have, in varying degrees, been adapted to the model of the market economy which policy-makers envisaged for them. The nature of the transition they are undergoing nevertheless remains unclear in a number of respects. In particular there is uncertainty over how far the legal system has achieved autonomy from the political sphere and from economic interests. More generally, the quality of legal institutions remains a matter for concern. If the assumptions which drove policy-making in the 1990s are correct, the legal system should become more effective over time, as an outcome of sustained economic growth. An alternative scenario is one in which legal institutions remain limited in their capacity to support market relations, thereby constraining economic development.
The work of this project consisted of a review of relevant secondary sources on the role of law in promoting economic development in emerging markets and an analysis of relevant law reform initiatives. Two research papers were prepared by Simon Deakin and John Hamilton. The first of these looked at the role of law in Russia’s transition to a market economy in the 1990s, using an historical perspective on the evolution of Russian and Soviet law (Hamilton and Deakin, 2013a). The second paper examined the theoretical and empirical basis of the idea of ‘legal origin’ in the context of Russian systems (Hamilton and Deakin, 2013b).