An Analytical Approach to Influence of Legal Institutions in Economic Development: A Focus on legal Institutions of Market Creating

Abstract

Certainly, rising material wealth is considered as a tool to pave the way for development. In this way, experts have found that in economic analyses, non-economic factors as important as economic factors. Accordingly institutional economic has focused on economic transactions and criticized the zero transaction cost world. As a result, institutionalism has announced that institutions (formal and informal rules) are important to achieve the economic prosperity, because they are as the rules of the economic game which can provide secure atmosphere, reduce risks and costs, and increase economic incentives to investment and trade. In this regard, the quality of legal institutions, especially legal institutions that create legal core of market (property and contract law) have been highly emphasized. Thus, this paper seeks to answer why property and contract law could contribute to economic growth and sustainable development? It is concluded that suitable legal institutions may provide a secure environment for investment and trade. These elements are vital to achieve economic growth and sustainable development.