Access to Justice and Economic Development: Evidence from an International Panel Dataset

We empirically investigate the impact of access to justice (ATJ) on GDP per capita growth in a panel of 83 countries from 1970 to 2014. Our analysis relies on a new database documenting the number of judges per capita as a proxy for capturing the cross-country evolution of ATJ. The proxy measures the extent to which disputes between economic actors can be resolved at a relatively low cost, without dysfunctional delay and discrimination. In a dynamic panel setting using internal instruments, we find that increasing ATJ by 1% increases the five-year growth rate of GDP per capita by 0.86 p.p. (0.17 p.p. annually) with diminishing marginal returns. In line with the diminishing marginal returns argument, we find that the effect of ATJ is two times smaller in Europe compared to other regions due to higher levels of ATJ. We find no evidence of a differential effect of ATJ across other regions, income levels, legal origins, democracy, corruption of the judicial system or human capital levels.