Glinavos, Ioannis (2010) Transition or development? Reassessing priorities for law reform. Progress in Development Studies, 10(1), pp. 59-74. ISSN (print) 1464-9934

Abstract

The modern literature on international development in conjunction with the rise of institutional economics has focused attention on the role of institutions in the operation of the economy and crucially on the function of law as setting a framework to market operations. An emerging consensus that views development as a legal in as much as an economic challenge is forcing us to revaluate the relationship between law, regulation, state power and the market. Indeed, the greater the need for law, the larger the role of the state in the economy. The purpose of this article is to enquire into the implications the modern literature on economic development emanating from international institutions (primarily the World Bank and the International Monetary Fund) has for law reform and the role of the state in the economy. The main question asked is whether regulation has a uniform role in all reform contexts or whether there is a difference between the role of law in the transition to a market economy as opposed to the promotion of general development. This article suggests that there is indeed a difference between the role of law in transition as opposed to development that centres on the primacy of the state in the design for reform. While transition, it is suggested, requires a more limited role for law (Washington Consensus), development necessitates a more thorough involvement of the state in the reform process (Post-Washington Consensus). This article offers some preliminary evidence to suggest that a minimal role for regulation focused on market promotion required by ‘transition type’ reforms is adopted across the board and applied indiscriminately to all development scenarios. This means that reform packages remain rather minimal in the involvement of the state and in the scope for law despite the input of institutional economics and the apparent enthusiasm for the promotion of the rule of law. The article concludes that once a distinction is drawn between the different designs needed for transition and development, it becomes evident that a larger role for law and state regulation is needed that goes beyond mere market promotion. The promotion of development which encompasses political, social and economic aspects therefore asks for a wider role for the state.

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