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Report on Rule of Law and Economic Development

Rule of law and economic development:
A Comparative Analysis of Approaches to Economic Development across the BRIC Countries
Montreal, December 2012

This report is the outcome of a partnership over the past year between the Faculty of Law at McGill University and the Center for Legal and Economic Studies (CLES), based in Moscow. The report complements a larger broad-based study involving contributions by notable legal scholars including Roderick A. Macdonald (McGill University), Peter Solomon (University of Toronto), David Lametti (McGill University), René Provost (McGill University), and Fabien Gélinas (McGill University). The primary goal of this partnership for the faculty is to support the work of CLES by channelling Canadian and foreign expertise in a range of areas to advance transparency, accountability, and good governance in Russia. CLES is committed to strengthening the rule of law, with an emphasis on the modernization of Russian criminal law and law enforcement practice to spur and sustain much-needed economic development. By drawing on McGill’s position as a centre of comparative and foreign law expertise, the faculty has sought to advance research on the interplay between legal and economic development in transition economies.


The report published on the McGill University web-site.

You can read the full report here (in English, *.pdf)


Table of Contents

Preface  vii

SECTION 1: An Introductory Overview to Rule of Law and Economic Development across the BRICs 1

Introduction  1

Political Systems and Legal Traditions across BRIC countries  6

Overview of Rule of Law across the BRICs  7

Economic Overview of the BRICs  8

Sustainable Economic Growth  10

Conclusion  15

Bibliography  16

SECTION 2: Governance across the BRICs 19

Introduction  19

The State of Governance Today  19

Understanding the Term “Governance”  19

Evolution of the Term “Governance”  20

The Functioning of “Governance”  21

Assessing Governance across the BRICs  23

Regime or Political Form  24

Normative Political Forms and the Link to Economic Development  24

Brazil 25

India 27

Russia 28

China 30

Assessing Political Form as a Path to Economic Development  31

Political Function  35

Economic Approaches to Growth and Development  36

Assessing the Success of the Various Economic Approaches  40

The Political Element: “Separation of Powers” and “Checks and Balances”  45

Brazil 46

India 48

China 48

Russia 49

Efficient, Independent, Accountable, and Open Public Service  50

Conclusion  55

Appendix 2.1: Definitions of the Term “Good Governance” as Employed by Various International Organizations  56

Bibliography  57

SECTION 3: Examining the Quality of Institutions across the BRICs 65

Introduction  65

Measuring Institutions: Endogeneity, Causality, and Complementarities  67

The Primacy of Institutions over Policy  68

Political Economy: Institutions and Credible Commitment by Sovereigns  75

Measuring the Impact of Formal and Informal Institutions  82

Conclusion  90

Bibliography  92

SECTION 4: The Judiciary across the BRICs – Institutional Values and Judicial Authority at the Intersection of Governance 98

Introduction  98

Judicial Power and Judicial Independence  99

Case Studies of the Judiciary  103

Brazil 103

Russia 107

China 111

Formal Institutions  111

Informal Institutions  112

The Interplay of Political and Legal Criteria  114

Corporate Malfeasance and Selective Access to Justice  114

Rule of Law and the Judiciary  115

A Comprehensive Overview of the Judiciary in India 121

The Structure of India’s Judiciary  122

Judicial Activism  123

Judicial Accountability  125

What is the Cause of Case Backlog?  128

Improving Infrastructure  129

Shortage of Judges and Backlog  129

Table of Contents   |  iv iii  |  Table of Contents

Litigation Rates as a Measure of Development  131

Attempts to Resolve High-Value Commercial Case Backlog  134

Best Practice – The Bombay High Court and the Maharashtra Cabinet  136

Alternative Dispute Resolution as a Way Forward  137

Conclusion  142

Bibliography  143

SECTION 5: Corruption Across the BRIC Countries 153

Introduction  153

Why Corruption?  153

Definition  154

Scale and Nature of Corruption  156

Petty Corruption  157

Transactional Corruption in the Business Sector  161

Capture or Mutual Exchange?  167

Corruption and Foreign Investment  173

Tax Evasion and Capital Flight  178

Organized Crime  181

Anti-Corruption Accountability across the BRICs  184

Legal Framework  184

Anti-Corruption Legislation in Practice in India, Russia, and China 186

Anti-Corruption Agencies and Political Interference in China, Russia, India,

and Brazil 188

Bureaucratic Integrity in Russia and India 194

Conclusion  197

Bibliography  198

Media and Civil Society  208

Introduction  208

A Theory of How Responsible Media and Effective Civic Participation

Can Support the Rule of Law and Economic Development  208

Media and Civil Society in the BRIC Countries  210

Traditional Media  211

Civil Society  214

New Media  218

State Control of Media or CSOs  221

Conclusion  226

Bibliography  227

Appendices 233

Appendix A – Laws of Brazil 235

Appendix B – Laws of Russia 243

Appendix C – Laws of India 250

Appendix D – Laws of China 258

Appendix E – International Treaties and Conventions  266