The Quality Of Judicial System And Business Environment

Well-functioning legal and judicial institutions are critical to economic growth in modern economies. They define the rules by which markets function, and they provide a means to resolve disputes, protect economic and social rights, and hold governments accountable for their actions. By promoting investment, good judicial institutions can contribute to economic growth and development. “The centrality of a strong justice mechanism lies in its essential contribution to fostering economic stability and growth, and to enabling all manner of disputes to be resolved within a structured and orderly framework” [UNODC, 2011*]. 

The role of institutions goes beyond the legal framework. Government attitudes toward markets and freedoms and the efficiency of its operations are also very important: excessive bureaucracy and red tape, overregulation, corruption, dishonesty in dealing with public contracts, lack of transparency and trustworthiness, inability to provide appropriate services for the business sector and political dependence of the judicial system impose significant economic costs to businesses and slow the process of economic development. 

Data compiled by two independent international agencies clearly show, that the overall quality of legal system, as well as the quality of justice institutions (both civil and criminal), are directly correlate with the business environment and economic performance:

• All High-income OECD countries, with only exception of Greece, have high scores on WB Ease of Doing Business and WJP Rule Of Law Index scales;
• High-income non-OECD countries (with notable exceptions such as Russia, Argentina and Venezuela) also have high scores on both scales, while many Upper-middle-income economies fail primarily by quality of justice indicators. Thus, peculiarities of justice institutions in these countries could add a risk factor and lead to a major loss.
• Lower-middle-income and low-income economies, on average, have lower scores by all business and legal environment factors, and there are no country with low-income gaining the score higher than median.

In this Viz we invite you to explore interrelations between the quality of business environment and various aspects of legal system performance and the quality of judicial insttitutional framework. Also, we provide detailed UNODC criminal jusice (prosecution and courts) statistics to help provide a more holistic overview.

Sources: World Bank Doing Business 2016 Measuring Regulatory Quality and Efficiency; The World Justice Project's The Rule of Law Index, 2015; UNODC Administration of Justice Statistics (2011-2013)

* Resource Guide on Strengthening Judicial Integrity and Capacity, UNODC 2011.