Sunday, March 1, 2009

Paradigms and Theories of Law and Development

(Updated from 4/7/2006)
Currently the 'flavor of the month', "Rule of Law" (ROL) has been the dominant theory in the development industry with regards to the role of law in development since the 1990s. However, like with general or sectoral development theories, the current thinking was not always the case, and even today, there is disagreement about what ROL really is, as well as suggestions of alternatives to thinking about this relationship between law and development.


1. I am attempting to summarize some of the thinking about this relationship. The problem with available literature is there isn't an established framework for Law and Development theories because:

  • This topic, like its mother theory of ‘Development’, is relatively new, and compounded by the fact that it is not a mainstream in development practice
  • There are inconsistencies about what 'law' means, and what 'development' means
  • Consequently, there is a lack of consensus about the role of law in development, ranging in a spectrum from legal determinism (law is a main cause of development) to law has no causal effect with development. Most current literature lie somewhere in the spectrum.
  • Because of the contested nature of the research and practice in this field, it is hard to design a definite framework to discuss the theories of law in development.
    • Firstly inconsistent and obscure terminology by authors result in readers not really knowing for sure if they are talking about the same or different issues
    • Secondly, vocabulary is inconsistent because development experts from across disciplines, as well as across time.
  • Each theory expounded, even if it has a discrete name, overlaps with elements of others
  • Even within each theory, there is often disagreement about definition and application.
  • Law and Development as a field, so far, can best be described as reactive and learning

2. I use the word 'theory' loosely - it simply refers to the ways that people think about the role of law in development. Some authors claim that there are ‘3 Movements’, some use ‘4 Phases’, most use their own frameworks, and others do not use any at all.

3. I also start where 'development' as an industry started, around 1950. However, the study of this relationship started way earlier in the 18th century with Western scholars like Weber. I hope to write more about the history of law (as applied to development) in future, but for our current purpose, let's start with 'contemporary' development.

This table summarizes the rest of this post.

Dominant Development Theory
Law and Development
Program and Policies
Modernization and Growth Theory
Law and Development Movement
Transfer of US model of law to foster development via the state (judiciary and legal profession)
Washington Consensus
Law as tool for markets
Creation of pro-market laws and pro-market institutions
New Development Economics
Rule of Law
Rule of law as an intrinsic goal in context

Each theory description follows:

Modernization and Growth Theory

The intellectual background to this movement lies in the post- World War II period where the aid industry as we know it today really started, first in Europe after the war. Correspondingly, scholars and policymakers started being interested in the poor nations of the world.

Spanning from about 1950-1980, this initial phase of development has many names like ‘Modernization’, ‘Growth Theory’, ‘Industrialization’, ‘Import substitution’, and is based in large part on Neo-Classical and Keynesian theories. Following Walt W. Rostow, theorists of the 1950s and early 1960s contended that:

  • Developing countries follow the same logical process of evolution from underdevelopment to development previously experienced by the western world
  • The modernization of the latter would be accomplished by the diffusion of capital, institutions, and values from the First World (eg a free market system, democracy, and human rights)
  • This transfer would promote greater social equality, giving rise to development
  • The state/governments would serve as the primary agent of social change
Applying this paradigm to law in development, law was seen as instrumental to development in the following ways:
  • law, that based the western/modern model (ie US), is a technical set of skills that should be transferred to developing countries
  • law is central to the development process, that is, only when law is in place, development can and will take place. In other words, law fosters development
  • The legal profession will be the activists that will initiate reform, and legal education was emphasized to train judges and lawyers using a US-based model
  • Law reform (based on US legal culture) on substantive law was also emphasized, though less so.
  • The approach is 'top down' because of the state's central role, via the Judiciary and Bar 
However, after just a decade of implementation, the very proponents who started the movement claimed that it had been a failure. You can read my previous post here for more details, leading to decreased interest in Law and Development programs.

Neo-Liberalism/New Institutional Economics

Adjustments to Development Theory were made between 1980-2000, in large part because of the Neo-liberal Thatcher/Reagan influence. This resulted in the Washington Consensus for development by major aid institutions. Among the values and policies were:

  • Once the market is healthy, development will take care of itself (as opposed to development being a series of steps as above)
  • The intervention of the state should be minimal (compared to the above theory), only in so far as to promote and maintain a healthy national and global market
  • Fiscal policies and other key elements in the Washington Consensus were emphasized.

At this time, law was applied, not as a concept central to development, but as a tool to promote these healthy markets. Believes and practices included:

  • Formalization and standardization of laws that are important to promote free markets, such as
    •  Privatization
    • property rights
    • contracts;
    • corporate law that facilitates capital investment
    • a system of secured lending
    • o a tax system favorable for investments
  • State institutions should be developed to the extent that they can enact and enforce these laws. Some important values were (and you can see that they are from the same vein as ‘free markets’)
    • Stable institutions
    • Transparent and non-corrupt
    • Participatory
    • Competent and effective
    • States do not necessary need to adopt a western/US legal model, as long as their laws serve the above purposes

Post Washington Consensus/New Development Economics

In the 1990s, practitioners witnessed the disappointing results under the Washington Consensus. In fact, some have argued that the Washington consensus itself brought about devastating economic consequences in the 1990s such as mounting Latin American debt, the Asian Economic Crisis and the backlash from Eastern European transitional policies. The major aid agencies finally acknowledged the market’s inadequacies and since then have seemingly taken an about turn back to the first phase of development, where the state (and not the market) has a prominent role. However, these agencies counter-claim that the New Development Economics is different than that before, in these ways:

  • While there is an emphasis on democracy and governance, this is actually a convergence of the last two major paradigms
  • There is less determinism about what works, and more recognition of the contextual factors of countries.
  • There is more room for experimentation
  • pragmatism – there is no longer a belief in the absolute roles of states and/or markets

It’s implications for law is that it frees the practice of law and development from its absolute reliance on the market. While the literature (as I mentioned under my caveat) shows a lack of consensus of what Law and Development really is today, some general values and practices are as follows:

  • Law, like other sectors of development, needs to be sensitive to local contexts, including social, cultural and political, in addition to the market (ie economical). law seeks to remedy the failures of the preceding development efforts by addressing these dynamic aspects.
  •  The new buzz word within the industry is the ‘Rule of Law’. However, it means many different things to many people/organizations:
    • For some scholars and practitioners, the rule of law is an objective it inself, an end rather than a means, because it is a set of intrinsically valuable characteristics of a legal system, development.
    • For others, the Rule of Law is a means to other intrinsic ends such as good governance democracy, freedom of speech, human rights.
  • In practice, we have seen
    • The New Constitutionalism- the drafting and amendments of constitutions- which might be rooted in goals like democracy, human rights and freedom of speech.
    • Many big legal and judicial reform projects, under the umbrella of good governance
    • An increased focus on International Law and movements such as trade, labor, climate and the Millennium Development Goals (MGDs)
  • There is also a movement on law for poverty alleviation as a central theme. Increasingly, this is becoming known as ‘Legal Empowerment of the Poor’. It is not clear if this is part of ‘Rule of Law’ or something different altogether.
    • Rule of Law Proponents see this as part of the spirit of the ‘Rule of Law’, and offers it as a complement (or even alternative) to the current practice of ‘Good Governance’. This would mean a bottom-up approach grassroots approach, rather than a top-down legal/judicial reform.
    • Still others see this as a part of Legal and Judicial Reform umbrella under the Rule of Law.
    • Other yet offers it as an alternative paradigm based on the ‘Rights Based Approach’ to development, (which is a development paradigm that arose in the 1990s that I have not written about here because it was not mainstream, but I have published an article on it and will blog more about later.)
    • This is still a relatively infant movement, and, despite criticisms that it is still market focused or that it deals only with the very poor, it will be interesting to see where it will go. (I hope to blog more about this in a later post)
In summary, this is a simple framework to try to explain law and development in the aid industry. 

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