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The Economic Impact of Civil Justice Reforms

Author

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  • Dimitri Lorenzani
  • Federico Lucidi

Abstract

Quality, independence and efficiency are the key components of effective justice systems, a crucial condition to ensure the proper functioning of important drivers of growth in the EU. This paper focuses on judicial efficiency and investigates the impact of certain structural reforms affecting the civil justice system on selected economic outcomes, such as business dynamics and foreign direct investments (FDI). In doing so, the role of efficiency of justice systems (measured by disposition time and the ratio of pending cases to population, both referred to litigious civil and commercial disputes) is highlighted as a transmission channel linking judicial reforms to economic variables. The work draws upon a dataset based on the reports by the Council of Europe's European Commission for the Efficiency of Justice (CEPEJ). The results support the growth potential of judicial reforms rationalising the organisation of courts, fostering investment in in-court ICT and introducing incentives to reduce excessive litigation rates (for instance by enhancing the use of alternative disputes resolution methods), which are all found to positively affect the efficiency of civil justice. By increasing the efficiency of the justice system, these reforms can enhance entrepreneurial activity (as measured by firms' entry rates) and FDI.

Suggested Citation

  • Dimitri Lorenzani & Federico Lucidi, 2014. "The Economic Impact of Civil Justice Reforms," European Economy - Economic Papers 2008 - 2015 530, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    • Handle: RePEc:euf:ecopap:0530
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    Citations

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    Cited by:

    1. Erik Canton & Philipp Mohl & Adriana Reut & Melanie Ward-Warmedinger, 2016. "How to make the Economic and Monetary Union more resilient?," Quarterly Report on the Euro Area (QREA), Directorate General Economic and Financial Affairs (DG ECFIN), European Commission, vol. 15(3), pages 7-18, December.
    2. Pedro C. Magalhães & Nuno Garoupa, 2020. "Judicial Performance and Trust in Legal Systems: Findings from a Decade of Surveys in over 20 European Countries," Social Science Quarterly, Southwestern Social Science Association, vol. 101(5), pages 1743-1760, September.
    3. Erik Canton & Nicolas Carnot & Ulrich Clemens & Martin Larch & Philipp Mohl & Nigel Nagarajan & Adriana Reut & Borek Vasicek & Melanie Ward-Warmedinger, . "Quarterly Report on the Euro Area (QREA), Vol.15, No.3 (2016)," Quarterly Report on the Euro Area (QREA), Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    4. Ewelina Mruk & Inmaculada Aguiar-Díaz & Maria Victoria Ruiz-Mallorquí, 2019. "Use of formal insolvency procedure and judicial efficiency in Spain," European Journal of Law and Economics, Springer, vol. 47(3), pages 435-470, June.

    More about this item

    JEL classification:

    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation

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