Volume 8, Issue 1 -

For decades, scholars in law and development have studied interactions and dynamics among institutions, legal rules, and development. However, a comprehensive analytical framework in law and development, one which assesses the impact of law, legal frameworks, and institutions (LFIs) on economic development in key areas, is yet to be developed. This is partly because existing law and development study has focused on the manner in which international aid organizations, such as the World Bank, have provided support in relation to law and development, the agendas that they have pursued, and the issues that have been created, while relatively less attention has been given to the needs of developing countries to develop appropriate legal rules and institutions with due consideration to the local conditions which may not make direct “transplants” workable. To address the need, two preliminary but important tasks must be performed: one is to identify the “key areas” subject to state regulation that are directly relevant to economic development. The other is to develop proper methodology to assess the impact of LFIs on economic development. This article recounts the evolution of law and development studies for the past four decades, examines the necessity and feasibility of developing the Analytical Law and Development Model, or “ADM,” and considers relevant methodology issues. This article serves as a foundational work for the development of the ADM.

This article explores the connection of health to human and socio-economic development and the protection of pharmaceutical patents. It examines the concept of development and the right to development in international law in the context of access to medicines and patents protection. The provisions of the General Agreement on Tariffs and Trade (GATT) and the Agreement on Trade Related aspects of Intellectual Property Rights (TRIPS Agreement) that are significant to the pursuit of development are discussed. The article argues that there is a cognisable right to development in international law that is well recognised in international trade law and the pursuit of development should be duly taken into account in the negotiation and implementation of trade and IP agreements. The article highlights the potential danger in eroding the flexibilities in the TRIPS Agreement through the negotiation of free trade agreements and emphasises the need for IP and trade agreements to sufficiently accommodate and recognise legitimate measures genuinely taken to enhance national development. It is argued that developing countries should have a national IP implementation plan that can effectively enhance their human development objectives.

Over the last decade, many developing countries have adopted the Regulatory Impact Assessment (RIA). Despite the promise of bringing economic development, the results have been largely disappointing. The conventional wisdom is that the lack of administrative capacity and data availability are the two main reasons behind this failure. However, an in-depth analysis of two recent high-impact RIAs performed by Mexican authorities reveals that regulatory capture might be an additional and significant problem. In both cases, RIAs appear as merely instrumental to confer a scientific aura to the political rhetoric supporting a regulation that favored a specific interest group. In this vein, absent a sufficiently strong system of checks and balances, a greater sophistication of government officials might paradoxically reduce accountability and transparency. In the last section, we briefly sketch a possible reform aimed at preventing this risk, namely the introduction of a supranational non-binding process of appeal against especially relevant RIAs.

We propose a theoretical framework for understanding the evolution of the rule of law state, which is conceived as the equilibrium of a societal game in which actors accept the legitimacy of publicly enunciated legal rules. A meta-norm of respect for the sovereign legal power of the state is not self-forming on the basis of private conduct, but requires the coevolution of impersonal market exchange with effective state capacity to constitute and regulate markets. A functioning legal system must acquire the means not just to control private power but to constrain other organs of government. The emergence of such a ‘self-limiting state’ is an historical process which, while complementary to a market order, is also contingent and path-dependent, and is not preordained. Illustrating our argument with empirical evidence drawn from the contemporary experience of middle-income countries, with a focus on China, we argue that alternatives to the rule of law state, including interpersonal trust, closed networks and authoritarian political control, can only achieve limited scale and scope effects, and are prone to high deadweight costs arising from corruption and the capture of the public sphere by private interests. We also discuss the potential of transplants of legal rules and institutions to catalyse the transition to impersonal trade based on the rule of law, and present evidence, from time-series econometric analysis, that the diffusion of shareholder protection laws has the potential to support financial development in emerging markets. Evolution towards the rule of law state is, we conclude, one possible developmental path for middle-income countries.

Given the ongoing controversy over official development assistance (ODA) and the reduction to Australia’s commitment to aid funding, it is important that Australia’s ODA is effective and is perceived to be so. Among the diverse objectives identified by AusAID’s Office of Development Effectiveness Independent Review of Aid Effectiveness is the need to build local capacity. “Capacity building” is one of the Paris Declaration’s development assistance effectiveness principles, and several of the 2013 DAC Recommendations for AusAID refer to capacity building. Australia works with private contractors, governments of partner countries, civil society organizations and multilateral agencies. Partnering with multilateral organizations represents over 30% of Australia’s development assistance budget, and the DAC Report recommends further increases in partnering for sustainable capacity development. Because small, localized nongovernmental organizations (NGOs) can be flexible, sensitive to local needs, offer grassroots networks, potential specialization, and the ability to assist directly, a strong focus on local NGOs (LNGOs) is recommended to sustainably achieve the aim of capacity building. As is characteristic of the development assistance channel, LNGOs do not work in isolation; their work often involves partnering and cooperation. At a time of increasing multilateral aid and partnering, this study looks at issues of concern to LNGOs through the lens of contracting. Contract and the contracting process can provide critical, though sometimes overlooked, levers of control in the development assistance. The politics of contract law, however, assumes supportive infrastructures of both the government and the market. The utility of contract may take on different dimensions where the legal infrastructure for enforcement is limited and the cultural infrastructure for interpretation requires a pluralistic approach. By framing development assistance effectiveness as a contractual matter, this research adduces relevant threads of contract and organizational theory in its empirical analysis of contracting in development assistance. Semistructured interviews conducted with international and local NGOs and AusAID officials in Southeast Asia shed light on how LNGOs understand the contracting process, how they view contracts and agreements in partnering, what they perceive to be the important issues, and how contracts function. Local context matters nevertheless, this study suggests several common themes with interesting parallels to those in commercial contracting, including issues of control, information, allocation of risk and balance of power. From a theoretical perspective, controversy over the significance and meaning of contract has been part of the academic discourse for decades. This study contributes to better understanding of the role of contract in the development assistance context. Its implications extend to contract theory generally applicable in both commercial and noncommercial realms. From a practical perspective, this study suggests ways contract can better serve the aim of capacity building, and it informs the design of contracting processes better tailored to the actual objectives of contracting parties.

This paper examines how the term “local” has been understood in the definitions of “local content” in selected jurisdictions in developing countries. The paper critiques the centralist approach adopted by these countries that defines local content in terms of first consideration being given to their “nationals.” Little or no thought is given to the local populations who live in the area where the resource extraction takes place. The paper argues that if policymakers do not pay close attention to how “local” is defined, the benefits of local content requirements (LCRs) may be captured by “outsiders.” A bottom-up approach that recognizes the local populations where the extractive activities take place can help developing countries to prevent or douse resource conflicts. Community frustration resulting from seeing lucrative jobs given to “outsiders” can stir up conflicts. Given that revenues from extractive resources are managed by national governments in most jurisdictions, LCRs can provide a mechanism to meet the demands of subnational stakeholders, such as local governments and communities. This will in turn enable companies to obtain the social license to operate.

Developing countries with weak institutions often face severe commitment problems. International investors are reluctant to invest in these countries because their property rights are insufficiently protected. We argue that in order to overcome the commitment problem countries may subject investors’ rights protection to independent investment tribunals. These tribunals are known to strictly support property rights protection and to be reluctant to honor human rights considerations, although they might be applicable. This may explain why human rights of the local smallholders in large-scale land acquisitions are hardly protected in the Global South.