Tuesday, September 2, 2008

Economic & Human Development and the Integration of Law & Economics

The differences between common law and civil law legal systems have been extensively studied. Hayek for example suggested that common law legal systems have produced superior political and economic outcomes. A possible unexploited research opportunity is given by the observation that societies based on common law appear to have had much more success at integrating economic knowledge in their legal systems. Evidence is provided for example by the seemingly disproportional amount of law & economics conferences and professional associations in countries with common law traditions.

Obtaining data on the topic is a difficult task. One possibility is to use data on economic articles listed in EconLit and classified under the JEL K descriptor (Law & Economics). A ratio can be created based on the number of law & economics articles focusing on a region of the world to the total number of articles focusing on the same region. These are the results:

All regions: 21,317/889,006 = 2.4%
Northern America: 7,110/188,053 = 3.8%
Oceania: 389/13,902 = 2.8%
Europe: 3,016/143,814 = 2.1%
Latin America and the Caribbean: 419/25820 = 1.6%
Asia: 1,059/80,766 = 1.3%
Africa: 186/18456 = 1.0%

The "all regions" ratio includes a large number of articles of unidentified region focus, so it does not represent a weighted average of the other ratios.

There is a clear relationship between the share of law & economics articles and the level of economic and human development of a region. Given that the field of law & economics is relatively recent compared to other economic fields it could be argued that the same factors that helped certain regions to develop also promoted the integration of law & economics.

The data is also telling on the role of common and civil law. Ratios for Asia, Africa and Latin America suggest that civil law hinders integration of economic knowledge, while ratios for North America and Oceania indicate that common law promotes integration. European legal systems are mostly based on civil law, and they appear to be less able to integrate economic knowledge in their legal systems when compared to other developed regions (see this pictorial description of countries according to their legal systems).

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