Economic Development, Business Growth and the Rule of Law
Building a stronger, healthier private sector is often regarded as an essential component towards reducing poverty and improving living standards.
Though the factors that may affect and hinder business development are multifold, there is no denying that the private sector is most vulnerable in countries with a weak rule of law. The negative effects associated with weak rule of law and that can adversely impact economic development is lengthy: there is often widespread corruption at all levels of government and among private entrepreneurs themselves, which generates substantial additional costs for businesses and can therefore become a serious financial burden; business leaders must grapple with unpredictable or ever-changing laws and regulations and may also find it particularly hard to develop their activity; likewise, an ineffective or corrupt judicial system failing to rule fairly, objectively and in a timely fashion on business disputes can directly jeopardize the viability of the private sector. Read more.
WJF Rule of Law blog – Economic Development
During the 1997 financial crisis in the Asia-Pacific region, the economies that suffered the least impact were those largely supported by small-medium size enterprises that received little or no help from large banks and government. The survival instinct enabledthem to seek and secure resources through self-financing or from other private sector element such as venture capital. Many of them grew into large companies during the next decade. A good test for such dynamism is to examinethe one hundred largest companies in each economy in the region on a yearlybasis forthe past ten years to see how many new players entered the list every year. Those economies presented a different listing with new players at different year then clearly demonstrated that they have anengine for sustaining economic growth.
Thank you to Jose Duran for his interesting discussion on the impact of used-product imports from developed countries on Bolivian manufacturers. His blog post is fascinating on many levels. I’d like to call out two in particular that strike me as being directly relevant to our discussions on the rule of law and economic growth. Read more »
In developing countries the informal economy is a response to contraband promoted by industrialized countries
One of the characteristics of developing countries like Bolivia, is the growing importance of the informal economy arising from extralegal activities and contraband which primarily affect the productive sector through unfair competition, because these activities do not pay taxes.
This situation has worsened with the export of used products from industrialized countries to developing countries, such as clothing, cars, work equipment, etc., a situation that is contaminating the environment of these countries and affecting their populations’ health.
Therefore informality understood as the non-formalization of businesses, who avoid paying taxes, do not provide social and health security to their employees, is a strategy that are SME´s enterprises use to compete with smuggled products. Read more »
Welcome to the beginning of what I hope will be an interesting and fruitful discussion of the role of the Rule of Law in economic growth and development. I come to this discussion very energized as a result of spending the last two days teaching several course modules on Intellectual Property Licensing and Technology Transfer at the International Development Law Organization in Rome. The 25 course participants are private lawyers, professors and government officials focused on intellectual property from 16 emerging markets around the world.
In preparation for WJF III, I reserved some time to ask the participants what their thoughts were about economic development and the rule of law, in particular what are the biggest roadblocks to economic development in their markets. Participants from Uganda, Bangladesh, Jordan and China focused in on labor and human rights issues, including: Read more »