The Role of the Courts in Economic Development: The Case of Prewar Japan
AbstractIn this paper, we explore the role of the legal system in economic development, focusing on its relationship to the role of private mechanisms in contract enforcement. We use long-term prefecture-level panel data that cover the early stages of industrialization and urbanization in Japan. We found that industrialization increased the demand for civil lawsuits, but that this was conditional on urbanization. In other words, increased demand for civil suits occurred only where industrialization and urbanization simultaneously progressed. At the same time, the inefficiency of the legal system impeded industrial growth, but only conditional on urbanization. That is, the inefficiency of the legal system impeded industrialization only in urban areas. These findings suggest that community-based contract enforcement mechanisms worked in rural areas and that these mechanisms were replaced by the formal legal system as urbanization progressed and community ties declined.
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Bibliographic InfoPaper provided by Institute of Economic Research, Hitotsubashi University in its series PRIMCED Discussion Paper Series with number 4.
Length: 20 p.
Date of creation: Jan 2011
Date of revision:
Note: This paper was presented at the workshop on “Law and Economic Development: A Historical Perspective” at Utrecht University, at a seminar at the Virtual Center for Advanced Studies in Institution, and at a seminar at Osaka University.
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Court; Law; Contract Enforcement; Economic Development; Japan;
Other versions of this item:
- Masaki Nakabayashi & Tetsuji Okazaki, 2007. "The Role of the Courts in Economic Development: The Case of Prewar Japan," CIRJE F-Series CIRJE-F-517, CIRJE, Faculty of Economics, University of Tokyo.
- K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- N45 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Asia including Middle East
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-11-07 (All new papers)
- NEP-HIS-2011-11-07 (Business, Economic & Financial History)
- NEP-LAW-2011-11-07 (Law & Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
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