Rule of law and economic development

Abstract

One of the main motivating forces behind China's turn toward rule of law has been the belief that legal reforms are necessary for economic development. In emphasizing the importance of law to economic development, Chinese legal scholars and leaders align themselves with a long tradition of Western legal scholars, economists, and development agencies from Weber to the World Bank who have argued that rule of law is conducive to economic growth. A 1997 World Bank report, for instance, claimed that “countries with stable government, predictable methods of changing laws, secure property rights, and a strong judiciary saw higher investment and growth than countries lacking these institutions.” The assumption that rule of law is necessary to sustain economic development has not gone unchallenged, however. Critics come in two general kinds: generalist and China-specific. Generalist critics question both the theoretical basis and the empirical data for asserting that rule of law leads to economic growth. Even assuming rule of law is normally integral to economic development, China-specific critics question whether law has had much to do with China's remarkable growth in the last twenty years, and suggest that China may be an exception to the general rule. If the critics are right and rule of law is not necessary for sustained economic growth, at least in China, then one of the ruling regime's main incentives for promoting legal reforms will be undercut, calling into question the future of rule of law in China.