Legal Development in Developing Countries - The Role of Legal Culture

Abstract

This paper draws on Chapter VI of my PhD thesis entitled 'Corporate Governance in the Indonesian Capital Market: A Legal-Sociological Study of Legal Culture' which was submitted to the Law School, University of Melbourne, in December 2000. The paper seeks to explain the role of legal culture in legal development, especially in the case of developing countries. Although the paper is essentially conceptual in nature, I illustrate certain points with examples from the Indonesian corporate law reform experience in the 1990s. Part A begins with an outline of the law and development movement since the 1960s, focusing on legal transplants. In Part B, I look at what brings about change in legal systems. I discuss the contributions of Lawrence M. Friedman (a legal sociologist from Stanford University) concerning legal culture and Ugo Mattei (a comparative lawyer from University of Trento) concerning the taxonomy of legal systems. Although there is increasing recognition of the influence of legal culture in legal change, the problem is that legal culture is complex and difficult to analyse. To overcome this hurdle, and using the work of Friedman and Mattei as a launching pad, in Part C I introduce the concepts of 'legal habit' and 'legal consciousness' and then construct a simple but workable model which can be used to analyse legal culture and legal development in a dynamic context. I conclude the discussion in Part C by highlighting the critical role of legal culture in legal development. Essentially, law reform cannot succeed without concomittant improvements to legal culture. In the case of emerging and transitional economies, much of the international aid for law reform is spent on drafting new legislation and creating new policies and institutions, with relatively little being spent on studying and improving legal culture. I argue that his approach is misguided. According to my model, successful implementation of law reform proposals is conditional upon improving a community's legal culture to make it more amenable to change. If this is not done, current law reform initiatives - especially those in developing countries - are facing a high risk of failure.