The Political Economy of the World Bank’s Legal Framework for Economic Development

Abstract

Over the last two decades there has been a renewed interest in the role of law in development. The major player in the new law and development movement is the World Bank which provides advice on, and funding for, law reform projects. The Bank’s initial foray into law reform issues was through adjustment programmes intended to push back the state from the economy in developing countries in order to liberate markets. Despite the Bank’s claim that adjustment programmes are technical and apolitical, they have a negative impact on the livelihoods of many social groups in the countries implementing them. In the 1990s the Bank has expanded lending for law reform programmes as part of its good governance agenda. It promotes a procedural and institutional version of the rule of law as the most appropriate framework for development. This version emphasizes formal equality and is appropriate for neo-liberal capitalist development. It is unsuitable for other strategies of development which emphasize equity and fairness. The Bank’s legal framework also emphasizes the importance of legal sector institutional reforms. This is based on new institutional economic explanations of the role of law in influencing individual and social behaviour. The relationship between institutions and human conduct is not direct and is complex. As a result of interactions between formal and informal institutions, the impact of formal reforms is difficult to predict.