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The Guarantees of Freedom

Author

Listed:
  • Rafael La Porta
  • Florencio Lopez-de-Silanes
  • Cristian Pop-Eleches
  • Andrei Shleifer

Abstract

Hayek (1960) distinguishes the institutions of English freedom, which guarantee the independence of judges from political interference in the administration of justice, from those of American freedom, which allow judges to restrain law-making powers of the sovereign through constitutional review. We create a data base of constitutional rules in 71 countries that reflect these institutions of English and American freedom, and ask whether these rules predict economic and political freedom in a cross-section of countries. We find that the English institutions of judicial independence are strong predictors of economic freedom and weaker predictors of political freedom. The American institutions of checks and balances are strong predictors of political but not of economic freedom. Judicial independence explains half of the positive effect of common law legal origin on measures of economic freedom.

Suggested Citation

  • Rafael La Porta & Florencio Lopez-de-Silanes & Cristian Pop-Eleches & Andrei Shleifer, 2002. "The Guarantees of Freedom," Harvard Institute of Economic Research Working Papers 1943, Harvard - Institute of Economic Research.
  • Handle: RePEc:fth:harver:1943
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    References listed on IDEAS

    as
    1. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 2000. "Investor protection and corporate governance," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 3-27.
    2. La Porta, Rafael & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1997. " Legal Determinants of External Finance," Journal of Finance, American Finance Association, vol. 52(3), pages 1131-1150, July.
    3. Alberto Alesina & Reza Baqir & William Easterly, 1999. "Public Goods and Ethnic Divisions," The Quarterly Journal of Economics, Oxford University Press, vol. 114(4), pages 1243-1284.
    4. Kevin Keasey & Steve Thompson & Mike Wright (ed.), 1999. "Corporate Governance," Books, Edward Elgar Publishing, volume 0, number 1708.
    5. repec:hrv:faseco:30728041 is not listed on IDEAS
    6. Vives,Xavier (ed.), 2000. "Corporate Governance," Cambridge Books, Cambridge University Press, number 9780521781640, May.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2002. "The Regulation of Entry," The Quarterly Journal of Economics, Oxford University Press, vol. 117(1), pages 1-37.
    2. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 2003. "Law and finance: why does legal origin matter?," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 653-675, December.
    3. Rabah Arezki & Frederik van der Ploeg, 2007. "Can the Natural Resource Curse Be Turned Into a Blessing? The Role of Trade Policies and Institutions," IMF Working Papers 07/55, International Monetary Fund.
    4. Thorsten Beck & Asli Demirguc-Kunt, 2005. "Law and Firms' Access to Finance," American Law and Economics Review, Oxford University Press, vol. 7(1), pages 211-252.
    5. Djankov, Simeon & Glaeser, Edward & La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2003. "The new comparative economics," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 595-619, December.
    6. Philippe Aghion & Alberto Alesina & Francesco Trebbi, 2004. "Endogenous Political Institutions," The Quarterly Journal of Economics, Oxford University Press, vol. 119(2), pages 565-611.
    7. de Haan, Jakob & Sturm, Jan-Egbert, 2003. "Does more democracy lead to greater economic freedom? New evidence for developing countries," European Journal of Political Economy, Elsevier, vol. 19(3), pages 547-563, September.
    8. Tao Kong, 2007. "A Selective Review of Recent Developments in the Economic Growth Literature," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 21(1), pages 1-33, May.
    9. Stijn Claessens & Luc Laeven, 2003. "Financial Development, Property Rights, and Growth," Journal of Finance, American Finance Association, vol. 58(6), pages 2401-2436, December.
    10. Ke-young Chu, 2010. "Collective Values, Behavioural Norms and Rules Building Institutions for Economic Growth and Poverty Reduction," Working Papers id:3018, eSocialSciences.
    11. Rabah Arezki & Frederick van der Ploeg, 2011. "Do Natural Resources Depress Income Per Capita?," Review of Development Economics, Wiley Blackwell, vol. 15(3), pages 504-521, August.
    12. Chisari, Omar O. & Ferro, Gustavo, 2009. "Gobierno Corporativo: los problemas, estado actual de la discusión y un ejercicio de medición para Argentina
      [Corporate Governance: the problems, the current stage of the discussion and a measureme
      ," MPRA Paper 15630, University Library of Munich, Germany.
    13. Alston, Lee J. & Gallo, Andrés A., 2010. "Electoral fraud, the rise of Peron and demise of checks and balances in Argentina," Explorations in Economic History, Elsevier, vol. 47(2), pages 179-197, April.
    14. Ohnesorge, John K. M., 2003. "China's economic transition and the new legal origins literature," China Economic Review, Elsevier, vol. 14(4), pages 485-493.
    15. Tay-Cheng Ma, 2012. "Legal tradition and antitrust effectiveness," Empirical Economics, Springer, vol. 43(3), pages 1263-1297, December.

    More about this item

    JEL classification:

    • K0 - Law and Economics - - General
    • N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative

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