Transcript Introduction to the theory of Law and Development

Introduction to the theory of Law and
Development
By Chen Lei
University of Stellenbosch
Presentation for Land Law Forum
20 September 2005
Introduction
Law and development, as an academic field in the US, began in the 1940s,
thrived in the middle to late 1960s, and was declared dead by its advocates in late
1970s.
This study can be said to have been a short-lived movement.
However, quite recently, this field of study has experienced a resurgence as
signaled by some far-reaching academic writings by legal scholars, economists
and NGO’s.
Main Arguments
How to restructure the economy to create economic growth.
How to institute a legal infrastructure that maximizes the rule of law while
sustainable economic development are promoted.
Hypothesis
Neo-classical
Formal property institutions with clearly defined property rights is essential to the
functioning of a market economy and sustained economic growth,
on the other hand recent commentary suggests that a causal link between the
clarity of property rights and market efficiency is also necessary.
Development should also include economic and political factors.
See Carty, Kennedy and De Soto
Background
Law and development theory are inherently related to international political and
economic events.
It began in the late 1940s with the design of a postwar order and the
independence of former colonies.
The objective of this theory is to promote the adoption of western-like institutions
and western-oriented legal infrastructures.
This theory has recently gained new impetus with the collapse of the Soviet Union
and the reassessment of the value of centralized planning.
Main Representatives:
Origin: Weber’s thesis: The relationship between “rational law” and economic
development.
“Rational”, ‘formal” and “logical” law
Founders: David Trubek, Douglas North.
Revivalists: Anthony Carty 1992, Hernando De Soto and David Kennedy.
Evaluation
Advantages (Institutionalist view)
Law and development theory provides a very reliable theory for sustainable
development in developing countries.
Especially because quite a few developing countries in Africa, Latin America and Asia
lack a unified and all-encompassing property system to capitalize on marketable assets
in especially land.
Evaluation
To achieve a sustainable market economy with a unified, impartial, and efficient
legal framework, law and development theory contributes a logical framework.
Some developing countries achieved positive results by using this theory.
E.g. South Korea, Singapore, Thailand and Malaysia.
As a theoretical tool, Law and development theory contributes significantly to the
accelaration of globalization of international markets.
The Law and development theory is itself still in a process of self-development and
introspection.
This allows for the adaptation of new social, political and economic transformations.
Evaluation
Disadvantages (Cultural view)
Motivation: “Legal transplantation” & “legal imperialism”
A real assistance for developing countries?
Some political purpose behind this study----to bring those developing countries within
the orbit of the West instead of the Soviet bloc.
Evaluation
Every jurisdiction is politically, culturally, economically, and socially contingent.
Legal denationalization - Legal liberalism
Direct transplantation without corresponding adjustments
Evaluation
“A flawed and rather inept attempt to offer American legal assistance and implicit
American models …were themselves flawed, vulnerable to executive ordering and
authoritarian abuse.”----James Gardner
Example: Ethiopia Civil Code of 1966
3 Convergence v. divergence
The study of law and development which is based on so-called “rational law” will lead
to legal globalization.
It was and will never be the case for globalization of all kinds of jurisdictions in the
world due to the diversity of pluralism and different backgrounds.
Evaluation
The right and indispensable way to promote sustainable economic growth in
different countries is to formalize a corresponding legal framework, which is
compatible with its political, economic and cultural situation.
Different countries has different unique historical background and current
problems. Those divergent problems, which are existed in different countries,
cannot be resolved in one formula.
No elixir : Culture matters.
Evaluation
Independence v dependency
Political independence v. economic and legal
dependency = right of development.
Law & Development Theory’s impact on the
South African Land Reform Programme
Application: the relationship between property institutions (land) and economic
development through a survey of the institutional changes of property rights in postapartheid South Africa.
Land redistribution or restitution is extremely
necessary and urgent
Without land redistribution, democracy would not be a real democracy.
The current situation of land occupancy is a colonial and apartheid legacy which is starkly
contrast with democracy and social justice.
Utilization of land use rights (land tenure)
The apartheid land distribution vested 87 percent of South Africa's land area in the
hands of the white minority. Hence, a legal framework for the state’s acquisition of
land for resettlement purposes and enforcement mechanism are very necessary.
Three ways:
Utilization of land use rights
State compensation for land expropriation according to market value, or at least
justified value.
This method is appealed to those land which is not fully utilized and wisely
developed in order to increase the land productivity. Also, it is suitable for those
land which influences the public construction for public interests.
Comment: a direct way but must be applied very carefully. It is only appealed to a
smidgen of land. However, it is still worthwhile and cannot be discarded.
Utilization of land use rights
The policy of fair State buy-out on the basis of “willing seller and willing buyer”
principle.
This method is appealed for those landowners who are willing to sell their
commercial farms and accept price offer from state.
Comments: it is also a direct way and easy to be managed by the state. However,
such “both-win” success can be only achieved under a special circumstance,
namely a willing sell. Also, land willing sellers are not the majority of white
landowners therefore the ensuing method is introduced.
Utilization of land use rights
Introduction of land use right
separation of land ownership and land use right is a suitable and reliable way at
this stage to carry out land reform in South Africa.
The reasons: first of all, the psychological adherence to land by white landowners--generations by generations--succession;
secondly, the purpose of land reform is to keep country stable and peaceful;
Utilization of land use rights
thirdly to comfort white landowners by maintaining or balancing their economic
status in a progressive way;
fourthly, it is a double-win if white landowners retain the land titles while
simultaneously vast majority of black people use and enjoy the land.
3 ABS (asset-backed securities)
It is kind of co-op to make farm workers become shareholders. This form can be
compared with shareblock ownership to make sense.
Main theories of land reform
Productivity theory (economic analysis of law):
State stability and prosperity theory:
Social justice theory---democracy---crimes
Balance theory---must take both sides’ interests into consideration
Transaction cost theory
Suggestions
1
2
Land reform and tax reform. Reduce land tax and other kinds of agricultural tax to
comfort white landowners.
Strengthen NGO’s role: many staff of the department of land affairs had come from
the NGO sector, which has been a tremendously important source of knowledge and
skills, and the Department intended to rely heavily on NGOs for implementation of its
programs.
Suggestions
3
4
Effectiveness of local government
Department of Agriculture staff remain committed to agricultural development
scenarios based on an expansion to the black community of older models of largescale mechanized commercial farming.
Suggestions
The Department of Land Affairs staff and the Land NGOs are more aware of the
success in other African countries in modernizing smallholder agriculture, but are
perhaps insufficiently concerned about productivity and how increases can be
achieved in the reform sector.
Joint training exercises for staff of the two departments, which would focus on
reconciling theclaims of equity and productivity, was recommended
as a partial
solution.
Suggestions
5
“Haste makes waste”. Land reform is a progressive project, which cannot be
applied in a very ruthless and forceful manner
International Examples: China
China - from 1949 to 1956
Pay money and interests to former private owners by the state
Differences:
a. The same race in China (Racial homogeneity)
b. The land convergence is not as serious as in SA
c. Different political system, i.e. ideology
d. Result of civil war (from the political
economic
perspective, is a consequence of a violent revolution)
International Examples: USA
US - 17 and 18 centuries
Land is not scarce
The population of native groups was small
US’s government has a political motive to expand its territory