On the Limits of Legal Origins

Posted by D. Daniel Sokol

One way to get at the limitations of the LLSV legal origins literature is to undertake a series of case studies that show the nuance of the different factors that affect economic growth.  The problem with case studies is that in political science, econ, finance and law literatures, case studies tend not to place so well even if they are very good.

Nevertheless, in spite of negative incentives on the part of at least some scholars to undertake this work, there is an emerging series of papers and articles that do the kind of deep digging that show the limitations of LLSV.  One recent such study is Institutions vs. Policies: A Tale of Two Islands by Peter Blair Henry (Stanford) and Conrad Miller (Stanford). 

ABSTRACT: Recent work emphasizes the primacy of differences in countries' colonially-bequeathed property rights and legal systems for explaining differences in their subsequent economic development. Barbados and Jamaica provide a striking counter example to this long-run view of income determination. Both countries inherited property rights and legal institutions from their English colonial masters yet experienced starkly different growth trajectories in the aftermath of independence. From 1960 to 2002, Barbados' GDP per capita grew roughly three times as fast as Jamaica's. Consequently, the income gap between Barbados and Jamaica is now almost five times larger than at the time of independence. Since their property rights and legal systems are virtually identical, recent theories of development cannot explain the divergence between Barbados and Jamaica. Differences in macroeconomic policy choices, not differences in institutions, account for the heterogeneous growth experiences of these two Caribbean nations.