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The Guarantees of Freedom

Author

Listed:
  • Andrei Shleifer

    (Department of Economics)

  • Rafael La Porta

    (Tuck School of Business)

  • Florencio Lopez de Silanes

    (School of Management)

  • Cristian Pop-Eleches

    (Department of Economics)

Abstract

Hayek (1960) distinguishes the institutions of English freedom, which guarantee the independence of judges from political interference in the administration of justice, from those of American freedom, which allow judges to restrain law-making powers of the sovereign through constitutional review. We create a data base of constitutional rules in 71 countries that reflect these institutions of English and American freedom, and ask whether these rules predict economic and political freedom in a cross-section of countries. We find that the English institutions of judicial independence are strong predictors of economic freedom and weaker predictors of political freedom. The American institutions of checks and balances are strong predictors of political but not of economic freedom. Judicial independence explains half of the positive effect of common law legal origin on measures of economic freedom.

Suggested Citation

  • Andrei Shleifer & Rafael La Porta & Florencio Lopez de Silanes & Cristian Pop-Eleches, 2002. "The Guarantees of Freedom," Yale School of Management Working Papers ysm261, Yale School of Management.
    • Handle: RePEc:ysm:somwrk:ysm261
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    References listed on IDEAS

    as
    1. Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2002. "The Regulation of Entry," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(1), pages 1-37.
    2. Simon Johnson, 2000. "Tunneling," American Economic Review, American Economic Association, vol. 90(2), pages 22-27, May.
    3. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 2000. "Investor protection and corporate governance," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 3-27.
    4. La Porta, Rafael & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1997. "Legal Determinants of External Finance," Journal of Finance, American Finance Association, vol. 52(3), pages 1131-1150, July.
    5. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 222-279, April.
    6. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    7. Alberto Alesina & Reza Baqir & William Easterly, 1999. "Public Goods and Ethnic Divisions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(4), pages 1243-1284.
    8. Kevin Keasey & Steve Thompson & Mike Wright (ed.), 1999. "Corporate Governance," Books, Edward Elgar Publishing, volume 0, number 1708.
    9. Vives,Xavier (ed.), 2000. "Corporate Governance," Cambridge Books, Cambridge University Press, number 9780521781640, October.
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    Cited by:

    1. Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2002. "The Regulation of Entry," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(1), pages 1-37.
    2. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 2003. "Law and finance: why does legal origin matter?," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 653-675, December.
    3. Thorsten Beck & Asli Demirguc-Kunt, 2005. "Law and Firms' Access to Finance," American Law and Economics Review, American Law and Economics Association, vol. 7(1), pages 211-252.
    4. Djankov, Simeon & Glaeser, Edward & La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2003. "The new comparative economics," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 595-619, December.
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    6. Tao Kong, 2007. "A Selective Review of Recent Developments in the Economic Growth Literature," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 21(1), pages 1-33, May.
    7. Rabah Arezki & Frederick van der Ploeg, 2007. "Can the Natural Resource Curse Be Turned into a Blessing? The Role of Trade Policies and Institutions," Economics Working Papers ECO2007/35, European University Institute.
    8. Donna Driscoll & Dennis Halcoussis & Anton D. Lowenberg, 2011. "Economic Sanctions And Culture," Defence and Peace Economics, Taylor & Francis Journals, vol. 22(4), pages 423-448, August.
    9. Miquel-Flores, Ixart & Reghezza, Alessio & Buchetti, Bruno & Perdichizzi, Salvatore, 2024. "Greening the economy: how public-guaranteed loans influence firm-level resource allocation," Working Paper Series 2916, European Central Bank.
    10. Stijn Claessens & Luc Laeven, 2003. "Financial Development, Property Rights, and Growth," Journal of Finance, American Finance Association, vol. 58(6), pages 2401-2436, December.
    11. Ohnesorge, John K. M., 2003. "China's economic transition and the new legal origins literature," China Economic Review, Elsevier, vol. 14(4), pages 485-493.
    12. Mutarindwa, Samuel & Schäfer, Dorothea & Stephan, Andreas, 2021. "Differences in African banking systems: causes and consequences," Journal of Institutional Economics, Cambridge University Press, vol. 17(4), pages 561-581, August.
    13. Wen, Jun & Zhang, Sen & Chang, Chun-Ping, 2022. "Legal origins and innovation: Global evidence," Technological Forecasting and Social Change, Elsevier, vol. 174(C).
    14. de Haan, Jakob & Sturm, Jan-Egbert, 2003. "Does more democracy lead to greater economic freedom? New evidence for developing countries," European Journal of Political Economy, Elsevier, vol. 19(3), pages 547-563, September.
    15. Ke-young Chu, 2010. "Collective Values, Behavioural Norms and Rules Building Institutions for Economic Growth and Poverty Reduction," Working Papers id:3018, eSocialSciences.
    16. Rabah Arezki & Frederick van der Ploeg, 2011. "Do Natural Resources Depress Income Per Capita?," Review of Development Economics, Wiley Blackwell, vol. 15(3), pages 504-521, August.
    17. Mutarindwa, Samuel & Schäfer, Dorothea & Stephan, Andreas, 2020. "Legal History, Institutions and Banking System Development in Africa," GLO Discussion Paper Series 444, Global Labor Organization (GLO).
    18. Chisari, Omar O. & Ferro, Gustavo, 2009. "Gobierno Corporativo: los problemas, estado actual de la discusión y un ejercicio de medición para Argentina [Corporate Governance: the problems, the current stage of the discussion and a measureme," MPRA Paper 15630, University Library of Munich, Germany.
    19. Alston, Lee J. & Gallo, Andrés A., 2010. "Electoral fraud, the rise of Peron and demise of checks and balances in Argentina," Explorations in Economic History, Elsevier, vol. 47(2), pages 179-197, April.
    20. M. D. R. Evans & Jonathan Kelley, 2018. "Strong Welfare States Do Not Intensify Public Support for Income Redistribution, but Even Reduce It among the Prosperous: A Multilevel Analysis of Public Opinion in 30 Countries," Societies, MDPI, vol. 8(4), pages 1-52, October.
    21. Tay-Cheng Ma, 2012. "Legal tradition and antitrust effectiveness," Empirical Economics, Springer, vol. 43(3), pages 1263-1297, December.

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    JEL classification:

    • N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative
    • P10 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - General
    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)

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