Rule of law and the size of government

Abstract

If those with political power benefit from corrupt institutions, rulers might not adopt the rule of law so the ruling class can command a larger share of a smaller pie. An empirical analysis reveals that the size of government is larger in those countries that enforce the rule of law. If government expenditures provide some measure of the ability of the ruling class to command resources, this suggests that those with political power could benefit from imposing a fairer and more objective legal structure. Another conjecture is that those in power maintain corrupt governments to pay off their supporters and enhance their ability to remain in power. However, the rule of law is also positively associated with political stability, so better enforcement of the rule of law also enhances the ability of incumbent governments to remain in power. *

Institutional Quality and the Wealth of Autocrats

“…Consistent with Holcombe and Rodet (2012) and Holcombe and Boudreaux (2013), this suggests that an increase in the quality of economic institutions makes autocrats better off, which calls into question the conventional wisdom that autocrats benefit from maintaining lowquality institutions. Consistent with the results in Table 2, the measures of initial political institutions all remain negative and highly statistically significant.…”

“…Holcombe and Rodet (2012) use government spending as a proxy for benefits to political elites under the assumption that while those elites cannot appropriate all that government spends, they control who gets the benefits of that spending. They look at a set of more than 100 countries with all types of governments -not just autocracies -to see if lower-quality economic institutions increase the size of government, both in real per capita terms and as a share of total income.…”

State provision of constitutional goods

“…The author concludes that government size is (i) positively associated with trade openness, (ii) positively associated with the share of population over 65, (iii) negatively correlated with majoritarian electoral systems, (iv) not related to income, and (v) positively related to political rights. Finally, Holcombe and Rodet (2012) show that the rule of law is positively correlated with the size of government. All of these papers use static models and, if possible, integrate fixed effects in their estimations.…”

“…These works aimed to assess the impact of constitutional provisions on economic outcomes. So far, two sets of constitutional rules have received most of the attention, i.e., rules defining de jure judicial independence (Feld and Voigt (2003), Hayo and Voigt (2007), Hayo and Voigt (2013), Melton and Ginsburg (2014), Holcombe and Rodet (2012)), and electoral/governmental rules (Persson and Tabellini (2004), Persson and Tabellini (2005), Blume et al (2009)).…”

Constitutional Judicial Behavior: Exploring the Determinants of the Decisions of the French Constitutional Council

“…Judicial independence has been extensively discussed in the past decades, since economists have argued that economic growth is fostered when litigants are confident in the independence of the legal system (Holcombe and Rodet (2012)). La Porta et al (1999) argued that differences in economic growth between civil law and common law countries were mainly explained by the lack of judicial independence in civil law countries.…”