Exiting a Lawless State
An earlier paper showed that an economy could be trapped in an equilibrium state in which the absence of the rule of law led to asset-stripping, and the prevalence of asset-stripping led to the absence of a demand for the rule of law, highlighting...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2008/02/9048193/exiting-lawless-state http://hdl.handle.net/10986/6589 |
| Summary: | An earlier paper showed that an economy
could be trapped in an equilibrium state in which the
absence of the rule of law led to asset-stripping, and the
prevalence of asset-stripping led to the absence of a demand
for the rule of law, highlighting a coordination failure.
This paper looks more carefully at the dynamics of
transition from a non-rule-of-law state. The paper
identifies a commitment problem as the critical feature
inhibiting the transition: the inability, under a rule of
law, to forgive theft. This can lead to the perpetuation of
the non-rule-of-law state, even when it might seem that the
alternative is Pareto-improving. |
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