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Editor's Choice The Relevance of Judicial Procedure for Economic Growth

Author

Listed:
  • Bernd Hayo
  • Stefan Voigt

Abstract

It has been argued that procedural formalism undermines economic efficiency by fostering rent-seeking and corruption. We challenge this view by arguing that a number of judicial procedures foster economic growth by increasing the predictability of court decisions, which leads to more transactions and higher investment levels. We investigate the effects on economic growth of 15 judicial procedures. Employing a standard growth model, we find in a cross-section of 67 countries that timeliness, written—as opposed to oral—procedures, and the right to counsel have a positive effect on growth, whereas the number of independent procedural actions as well as the presumption of innocence have negative effects. Our results partially contradict the results of former studies based on the Lex Mundi dataset. (JEL codes: H11, K40, 040, P51)

Suggested Citation

  • Bernd Hayo & Stefan Voigt, 2014. "Editor's Choice The Relevance of Judicial Procedure for Economic Growth," CESifo Economic Studies, CESifo Group, vol. 60(3), pages 490-524.
    • Handle: RePEc:oup:cesifo:v:60:y:2014:i:3:p:490-524.
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    File URL: http://hdl.handle.net/10.1093/cesifo/ifs044
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    Cited by:

    1. Theo S. Eicher & David J. Kuenzel, 2019. "European influence and economic development," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 52(2), pages 667-734, May.
    2. Gupta, Maansi & Bolia, Nomesh B., 2024. "Factors affecting efficient discharge of judicial functions: Insights from Indian courts," Socio-Economic Planning Sciences, Elsevier, vol. 91(C).
    3. Voigt, Stefan & Gutmann, Jerg, 2015. "On the wrong side of the law – Causes and consequences of a corrupt judiciary," International Review of Law and Economics, Elsevier, vol. 43(C), pages 156-166.

    More about this item

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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