Demand for Law in the African Private Sector

This article develops a model for explaining private sector response to law reforms in developing countries. The dependent variable in this model is the demand for law – the extent to which business owners and firm managers engage the formal legal system and attempt to mobilize the law to their adva...

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Bibliographic Details
Published inLaw and development review (Berkeley, Calif.) Vol. 11; no. 2; pp. 333 - 369
Main Author Finnegan, David L.
Format Journal Article
LanguageEnglish
Published Berlin De Gruyter 26.06.2018
Walter de Gruyter GmbH
Subjects
Africa
Business
Business law
Data processing
Decisions
demand for law
Dependent variables
Developing countries
Economic development
Economics
empirical
law and development
LDCs
Legal reform
Legal system
Markets
Mathematical models
Network analysis
Private sector
R&D
Research & development
Social factors
Social institutions
Social research
Social sciences
Supply-side economics
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Summary:This article develops a model for explaining private sector response to law reforms in developing countries. The dependent variable in this model is the demand for law – the extent to which business owners and firm managers engage the formal legal system and attempt to mobilize the law to their advantage when making market decisions. Demand for law is a crucial micro-connection in the causal chain linking law and law reform to market expansion and economic development. The theoretical framework developed here focuses on the interplay between informal and formal social institutions in influencing market decisions made by private sector actors. The article tests hypotheses generated by this framework by analyzing survey data collected from business firms in Dar es Salaam, Tanzania. The results support the hypothesis that demand for law is shaped by informal market institutions, particularly the informal business networks developed and maintained by firms. The analysis further suggests that these “demand-side” variables matter more than “supply-side” variables identified in the social science literature. These findings have important implications for law reform initiatives in developing countries and suggest avenues for further social science research on the relationship between law and economic development.
ISSN:2194-6523
1943-3867
DOI:10.1515/ldr-2018-0023