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Arbitration is No Substitute for State Courts

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  • Stefan Voigt
  • Sang-min Park

Abstract

It is often conjectured that non-state dispute resolution blossoms when state courts are not independent or are perceived as low quality. This conjecture implies a substitutive relationship between state and non-state dispute resolution. This is the first study that puts these hypotheses to an empirical test. We estimate a multilevel model based on more than 10,000 surveyed firms in some 50 countries. We find that perceived quality of state courts and the frequency with which firms resort to non-state dispute resolution are positively correlated and that, hence, state courts and non-state dispute resolution are complements, rather than substitutes. The hope of some policy-makers that development can be spurred by improving the conditions for non-state dispute resolution thus appears to be in vain.

Suggested Citation

  • Stefan Voigt & Sang-min Park, 2013. "Arbitration is No Substitute for State Courts," Journal of Development Studies, Taylor & Francis Journals, vol. 49(11), pages 1514-1531, November.
    • Handle: RePEc:taf:jdevst:v:49:y:2013:i:11:p:1514-1531
    DOI: 10.1080/00220388.2013.794262
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