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Summary: It is widely assumed that the rule of law is essential for economic growth. However, the rule of law is clearly a multidimensional concept, encompassing a variety of discrete components from security of person and property rights, to checks on government and control of corruption. We review the theory underlying these different causal mechanisms linking the rule of law to economic growth, and provide an introduction to some outstanding measurement issues. We find that the correlation among different components of the rule of law concept are not tight among developing countries and that some inferences about the effects of property rights protection may not be warranted. [ABSTRACT FROM AUTHOR]

Abstract: The state is often conceptualized as playing an enabling role for economic development, providing public goods, such as the legal protection of property rights, with the political economy of reform conceived in terms of bargaining among elites or special interest groups. We document a case which turns this perspective on its head: efficiency-enhancing institutional and behavioral changes arising, not out of a conscious, top-down program of reform, but rather as unintended (and in some respects, unwanted) by-products of state failure. Responses from a survey of North Korean refugees demonstrate that the economy marketized in response to state failure with the onset of famine in the 1990s and subsequent reforms and retrenchments appear to have had remarkably little impact on at least some significant share of the population. There is strong evidence, however, of powerful social changes, including increasing inequality, corruption, and changed attitudes about the most effective pathways to higher social status and income. These assessments appear to be remarkably uniform across demographic groups. While the survey sample marginally over-weights demographic groups with less favorable assessments of the regime, even counterfactually re-calibrating the sample to match the underlying resident population suggests widespread dissatisfaction with the North Korean regime. [Copyright &y& Elsevier]

Northeast Asia is notable for the relative absence of regional institutions. The Six Party Talks could constitute an embryonic starting point for the development of such institutions. The path toward greater institutionalization is likely to begin in a modest fashion. Functional working groups on topics such as the environment, maritime transport, technical barriers to trade, road and rail links, and energy could provide the locus for integrating North Korea into the broader regional and global economies. Foreign ministries will inevitably take the lead in developing the Northeast Asia Peace and Security Mechanism (NEAPSM), but meaningful economic achievements will require the involvement of other ministries. North Korea has proved problematic in this regard thus far. Moreover, given the importance of private-sector involvement in achieving sustainable economic development in North Korea, modalities will have to be developed to integrate private-sector actors when possible. The governments of the region, and particularly China and South Korea, may continue support on a bilateral basis as a hedge against North Korea's collapse or as inducements in the context of the nuclear talks. But the development of more permanent multilateral structures is unlikely until the nuclear issue is resolved. [ABSTRACT FROM AUTHOR]

With the enormous expansion of scholarship on this subject, "rule of law" has come to mean different things—ranging from security and order to the operations of courts and the administration of justice. We review the various streams of theoretical and empirical research by academics and practitioners, emphasizing the connections to economic development. The core logic is that security of property rights and integrity of contract underpin, respectively, investment and trade, which in turn fuel economic growth and development. However, property rights and contracts rest on institutions, which themselves rest on coalitions of interests. Formal institutions are important, but, particularly in developing countries, informal institutional arrangements play a significant part as well. These considerations lead us to caution against an exaggerated confidence in the ability of development assistance to implant new institutions for the rule of law. [ABSTRACT FROM AUTHOR]

The article emphasizes the importance of the second edition of Robert Wade's book "Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization." It examines a theoretical reconstruction of the three main issues raised by the book, the role of the state in economic growth, sheer capital accumulation and the role of the state in overcoming market failures. It addresses the issues that Wade's new introduction covers concerning the Asian financial crisis and the scope for industrial policy in the current age of globalization and liberalization.

The East Asian financial crisis of 1997-98 has provoked yet another round of controversy on the institutional foundations of the region's growth. This article provides some flavour of this new work by examining three factors that impinge on economic policy and performance: the role of political regime type; the structure of business-government relations; and the design of government agencies. Institutional weaknesses contributed to the onset of the Asian financial crisis. [ABSTRACT FROM AUTHOR]

An essay on the challenges of democratic consolidation as economies are stabilized is presented. It offers information on key issues, including the role of the state in achieving sustainable development, the distributional consequences of reform and their implications for political conflict, and accountability of the reform process. It also focuses on problems of poverty and income inequality as hindrances to economic growth and the new democratic governments.