The impact of the judiciary on entrepreneurship- Evaluation of Pakistan s
Journal of Public Economics 93 (2009) 114–125
Contents lists available at ScienceDirect
Journal of Public Economics j o u r n a l h o m e p a g e : w w w. e l s ev i e r. c o m / l o c a t e / e c o n b a s e
The impact of the judiciary on entrepreneurship: Evaluation of Pakistan 's
“Access to Justice Programme”☆
Matthieu Chemin ⁎
Department of Economics, UQAM, Canada
a r t i c l e
i n f o
Article history:
Received 17 May 2007
Received in revised form 11 April 2008
Accepted 16 May 2008
Available online 9 July 2008
JEL classification:
H11
H41
K42
O12
L26
a b s t r a c t
In 2002, the Pakistani government implemented a judicial reform that cost $350 million or 0.1% of Pakistan 's 2002 GDP. This reform did not involve increased incentives for judges to improve efficiency but merely provided them with more training. Nonetheless, the reform had dramatic effects on judicial efficiency and consequently on entrepreneurship: judges disposed of a quarter more cases and entry rate of new firms increased by half due to the reform. Using data from the World Bank Group Entrepreneurship Database, our estimates suggest that this translates into an increase of Pakistan 's GDP by 0.5%.
© 2008 Elsevier B.V. All rights reserved.
Keywords:
Legal system
Entrepreneurship
1. Introduction
Entrepreneurship is often thought to be important for economic growth (Schumpeter, 1934; Aghion and Howitt, 1997). But what makes people become entrepreneurs? The existing literature has focused primarily on entry regulation to explain the entry rate of new firms (Djankov et al., 2002; Alesina et al., 2005). In contrast, this paper focuses on an institution frequently cited by entrepreneurs as a major obstacle to the creation of a business but rarely studied: the judicial system. A fundamental role of governments is to ensure that property rights are secure and contracts enforced in order to foster investment and entrepreneurship.
This is in part achieved
Contents lists available at ScienceDirect
Journal of Public Economics j o u r n a l h o m e p a g e : w w w. e l s ev i e r. c o m / l o c a t e / e c o n b a s e
The impact of the judiciary on entrepreneurship: Evaluation of Pakistan 's
“Access to Justice Programme”☆
Matthieu Chemin ⁎
Department of Economics, UQAM, Canada
a r t i c l e
i n f o
Article history:
Received 17 May 2007
Received in revised form 11 April 2008
Accepted 16 May 2008
Available online 9 July 2008
JEL classification:
H11
H41
K42
O12
L26
a b s t r a c t
In 2002, the Pakistani government implemented a judicial reform that cost $350 million or 0.1% of Pakistan 's 2002 GDP. This reform did not involve increased incentives for judges to improve efficiency but merely provided them with more training. Nonetheless, the reform had dramatic effects on judicial efficiency and consequently on entrepreneurship: judges disposed of a quarter more cases and entry rate of new firms increased by half due to the reform. Using data from the World Bank Group Entrepreneurship Database, our estimates suggest that this translates into an increase of Pakistan 's GDP by 0.5%.
© 2008 Elsevier B.V. All rights reserved.
Keywords:
Legal system
Entrepreneurship
1. Introduction
Entrepreneurship is often thought to be important for economic growth (Schumpeter, 1934; Aghion and Howitt, 1997). But what makes people become entrepreneurs? The existing literature has focused primarily on entry regulation to explain the entry rate of new firms (Djankov et al., 2002; Alesina et al., 2005). In contrast, this paper focuses on an institution frequently cited by entrepreneurs as a major obstacle to the creation of a business but rarely studied: the judicial system. A fundamental role of governments is to ensure that property rights are secure and contracts enforced in order to foster investment and entrepreneurship.
This is in part achieved
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