The International Rule of Law and Economic Development

Abstract

The Rule of Law and economic development have long been recognized as being inter-related – a successful society has both. The question is how the two are related. Some scholars, whether in philosophy, law, history, or economics, argue that common law is more supportive of economic development, while others reject the distinction between common law and civil law as in any way affecting economic development. This multidisciplinary article approaches the question from a new contextual perspective that includes economics, philosophy, history, and law. It posits that while they are similar, the civilian term, Rule through Law (Rechttsstaat or L’Etat de Droit) wherein government is supposed to limit itself is historically less effective at being supportive of economic development for understandable reasons. This study does NOT argue that Common Law is ‘better’ than Civil Law. This study does show, however, that the common law is traditionally premised on a different relationship between the individual and government, and it is this non-instrumental relationship focused on problem-solving that encourages entrepreneurship and hence economic development.