2.3. Role of law in development
2.3.1 Theories on law and development
There are various theories on law and development which have changed overtime and new theory crystallizes as older ideas changed and new practices evolve.36 Theory of law and development describes ‘the relationship(s) between law (however defined) and development (however defined) in the particular context of the so called developing countries of the world.’37 In general, theory on law and development is a theory about the relationship between development and law particularly in developing countries, because the role of law in development is given due attention there. In this part of the thesis we will consider the connection of law in development endeavour and how the theories put their role in achieving development. Since economics and law are interconnected in law and development, ‘... there is an intimate relationship between prevailing economic ideas and dominant notions of the proper role of law in development.’38 Therefore, law and development theory is the product of the
interaction between legal theory, economic development theory and the practices of development agencies, and it changes as theories and practices in them change.39
25 and 26 2013, and adopted on July 26 2013. See The Vienna + 20 CSO Declaration Adopted in Vienna on June 26, 2013. The Declaration on the Right to Development also envisages that ‘the realisation of the right to development requires full respect for the principles of international law concerning friendly relations and cooperation among States in accordance with the Charter of the United Nations.’ Declaration on the Right to Development (n 12 above) Art. 3(2).
35 DD Bradlow ‘Differing conceptions of development and the content of international law’ (2005) 21 South
African Journal of Human Rights 47.
36 DM Trubek & A Santos ‘Introduction: The third moment in law and development theory and the emergence
of a new critical practice’ in DM Trubek & A Santos (eds) The new law and economic development A critical
appraisal (2006) 1.
37 EM Burg ‘Law and development: A review of the literature & a critique of “Scholars in self-entrangement”’
(1977) 25 The American Journal of Comparative Law 492 492.
38DM Trubek ‘Developmental states and the legal order: Towards a new political economy of development and
law’ university of Winconsin legal research paper No. 1075(1 December 2008) 16. Various law and development theories basically are associated with economic theories of the time they have been developed. DM Trubek ‘Law and the ‘New developmentalism’ in DM Trubek et al (eds.) Law, state and development in Latin America (2013) 1.
39 Trubek, above. A clear set of developmental policies can be derived and development projects planned where
17
Different theoreticians classify theories of development and law variously, for instance, into traditional40 and modern41 or micro42 and macro43 law and development theories. However, the
writer chooses to treat modernization theory, dependency theory, Neoclassical/Washington
40 According to traditional view, development is primarily an economic process consisting of discrete projects
like building a dam, a road and a school. Though traditional view recognises that development has social, environmental, and political implications, it argues that these can be dealt with separately from the economic aspects. Bradlow (n 35 above) 53; C Picker (2011) 4 ‘International trade and development law: A legal cultural critique’ The Law and Development Review 44-5. According to this view, environmental and social issues are externalities to a given development project. It also accepts that broad policy issues shall be decided by political process, the government and the society in which the policy or project will be implemented. Thus the decision making is 'top-down'. Bradlow, above, 53-55. The traditional view of international development law considers itself as a branch of international economic law that deals with legal aspects of international trade, finance and investment relating the challenges facing developing countries. In investment, it deals with issues of nationalisation and compensation, treatment and responsibilities of investors, regulation and incentives of investors. In trade, it focuses, for instance, on issues to special and differential treatment for developing countries through general system of preference (GSP), and the Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement on developing countries. Bradlow (n 35 above) 57-58.
41 The modern view asserts that economic aspects of development cannot be separated from social, political,
environmental and cultural aspects. In short, it views development as holistic and integrated process. Thus, development projects and policies should be treated not so much as discrete economic events but as episodes of economic, social, and environmental transformation. Picker (n 40 above) 44-5; Daniel Haile ‘Law and social change in Africa: A preliminary look at the Ethiopian experience’ (1973) 2 Journal of Ethiopian Law 380. According to this view, environmental and social issues that may be affected by a development project should be incorporated in the project and government must ensure that environmental and social costs are internalized into a development project. Furthermore, the proponents of this development view making consultation of all who will be affected by the development project before decision is made as essential, since consultation is important because the decision makers will learn about the benefits and drawbacks of the project and this will enable them to make a reasonable decision. The modern view of development demands more participatory form of decision-making than the traditional view. And thus, the sovereign is only one actor in the development process. Daniel above, 380-82.
42
Micro development is in practice, highly multidisciplinary which includes economic, social and cultural objectives as well as education, health services, income improvement and poverty alleviation, environmental protection, and public participation. Therefore, success in micro development cannot be measured merely through economic growth. We shall also consider developments in other sectors, for example, improved skills in communication, leadership management, stronger sense of self; protection of rights and liberties; increase in agricultural production or manufactured goods; a rise in a family income; buildings, roads, or water system. Furthermore, development focuses on the poor in developing as well as developed countries. Above, 168. Micro development theory was initiated in early 1980’s and focuses on developing law and legal resources for the poorest of the poor. Based on the micro development theory, several organisations, such as the International Centre for law in Development, founded in 1982, the International Development Law Institute founded in 1983, and the International Third World Legal Studies Association founded in 1980 were created. Blake (n 3 above) 169. Micro development theory operates in a number of substantive areas including human rights, land reform, environmental and natural resources, gender law, labour law, and consumer law. Micro Development is not a panacea: some problems may remain unsolved. Blake, above, 170.
43 According to macro development theory, development theory is best made from policy makers at the top.
Macro development theoreticians assume that development law shall apply in developing countries so as to benefit the poorest of the poor ignoring the poor in developed countries. Development at macro-level is essential particularly in drafting constitution, import/export laws, and labour laws, among others, must well be done at national level. Micro-level development policy and programmes can be criticised from macro-level development theory. Ideally, it is essential to combine both the macro and micro law and development theories. Blake, above, 171-72.
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Consensus, Sustainable Development law and development theories to clearly understand the theories and to appreciate the role of law in development.
Modernization theory of law and development
Law and development theory began in the 1960s as an outgrowth of modernisation theory of development.44 Modernisation theory propagates for Western style legal institutions to bring about development in developing countries.45 In addition to legal reform, it asserts that American
legal education would help developing countries to develop and legal education reform has been made to remove the obstacle and training programmes were undertaken throughout Africa, Asia, and Latin America in the hope that lawyers could be trained to appreciate the role of law in development, and to make them ‘social engineers’ to achieve development.46
Modernization theory of law and development is based on Weber’s47 historical explanation of capitalism in Western Europe. Law could best contribute for capitalism if universally and properly applied where property law protects the fruits of labour, and contract law guarantees the security of future exchanges.48 According to Weber, modern law is a necessary condition for modern market. He identified that rational legal system brings about development of capitalism and European legal system was considered more rational than other legal system.49
44 Blake, above 2, 166. Law and development movement began in 1950’s and 1960’s but failed to address the role of
law in the era of colonization, and it is fair to date the current development and law activities to the 1960’s. In 1960s, Western governments, institutions and academics involved themselves with the legal systems of many developing and newly-independent countries. JKM Ohnesorg ‘Developing development theory: Law and development orthodoxies and the Northeast Asian experience’ (2008) 28 University of Pennsylvania Journal of International Economic Law 119 222-23.
45 Blake (n 3 above) 166; Modernization theory, whose hay-day dates to the 1950s and 1960s consider development
as a “process by which “traditional” or “backwards” societies would transform along a host of directions to become “modern”. Ohnesorg, above 233.
46
G Barron ‘The World Bank & rule of law reforms’ (2005) 6.
47 Weber in L Cao ‘Law and economic development: A new beginning?’ (1997) 32 Texas International Law Journal
544.
48 Cao, above, 543. Modernization theory propagated by American economic historian Rostow, states that all
countries should pass similar stages of economic growth as that of developed countries. Modernization of developing countries could be made possible by diffusing capital, institutions and values from developed countries. Thus, modernization law and development theory argued that modernization of developing countries is made possible by diffusing Western law to developing countries. K Davis & MJ Trebilcock ‘What role do legal Institutions play in development?’ (1999) 12-13.
49
Cao (n 48 above) 548. The following are factors for development: a) There should be a rational legal system autonomous from other social structure; b) It should consist of systematically observable norms and rules that are purposively constructed; and c) The ‘norms and rules must be applied with principles consistency to produce a
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Modernization theory of law and development50 believed that newly developing states need the help of developed states not only in the form of money, machines and food but also the great capital of knowledge that includes law teachers, government professors, and research assistants.51 Thus, legal transplantation was made. The theory encouraged and promoted the adoption of Western economic institutions and legal infrastructure by developing countries. According to this theory, the basic objective of law is ‘...to lead the way to progress through law reform.’52
Moreover, this theory took law as an instrument of change and is called instrumentalist concept. It considered ‘law as a force which can be moulded and manipulated to alter human behaviour and achieve development.’53 The theory is based on the principle of contractual freedom, private property, and competitive markets.54 Modern law would provide functioning of modern market system and includes contract and property rights.55
Furthermore, this theory attempted to change the ‘traditional’ life of the society to ‘modern’ way of life.56 According to this theory, law is a social engineering by which reformist developing country governments would achieve social change in the direction of socially responsible
system of predictable, systematic, formal, and rational law autonomous from prevailing political or religious considerations.’ As above.
50
Modernization law and development theory is regarded as the first theory that began in the 1950s and ended up in 1980s. Ohnesorg (n 44 above) 232.
51 Burg (n 37 above) 499. Since law and development writers were born or at least educated in the West, they
prefer Western models to be adopted by developing countries to achieve development. Above, 503.
52 Cao (n 47 above) 546-547. Modern law and development theory believes that development in developing
countries could be hastened by transplanting legal institutions from developing Western countries. KE Davis & MJ Trebilcock ‘Legal reforms and development’ (2001) 22 Third World Quarterly 22.
53 Davis and Trebilcock (n 48 above) 13; Burg (n 37 above) 505. At the time law and development scholars did
not give proper attention to the concept that law can foster behavioural norms as educative function. Burg (n 37 above) 509.
54 Cao ( n 47 above) 549.
55 Davis and Trebilcock (n 48 above) 13.
56 Alex Inkeles identified the following as factors characterizing ‘modern’ person: a) openness to new
experience- to the extent of controlling births; b) independence from parents, priests leaders of government, trade unions, etc; c) belief in the efficiency of science and medicine; d) ambition to achieve high goals, in educational and profession; e) careful in time management(be on time); f) participate in civic and politics; g) update oneself with NEWS. However these may not be accepted in some other parts of the world as Harvard. A Inkeles ‘Making men modern: On the causes and consequences of individual change in six developing countries’ (1969) 75 American
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capitalism and pluralist democracy.57 Besides, it aspired for competent independent judiciary to ensure or uphold rule of law.58
In Ethiopia, it was a time for codification of the laws where Civil Code was one. In the preface, it is, partly provided as follows:
.... in order to consolidate the progress already achieved and to facilitate yet further growth and development, precise and detailed rules must be laid down regarding those problems which do not only face the individual citizen but the nation as a whole....59
It was also believed that the Code would contribute to the progress of the state and the welfare of the people(s).60 The Commercial Code of the 1960 of Ethiopia also provides in a similar fashion that law contributes for development of the country. In this regard, the preface partly reads:
In the modern world, no nation can hope to expand its commercial and economic life unless there exists a firm legal basis which will assure the necessary elements of stability and security in business transactions while at the same time providing a sufficiently articulated yet flexible framework within which trade and commerce may flourish and grow....61
This indicates the applicability of modern theory in Ethiopia. However, history has shown that modern law did not necessarily bring about development in developing countries, and the theory was attacked.62 The theory was criticised for ignoring the roles that ethnicity and culture can play in development. In the mid 1970s, this fault, inter alia, resulted in an ‘open crisis’ in law and development.63
57
Ohnesorg (n 44 above) 236.
58 Davis and Trebilcock (n 48 above) 22.
59 Civil Code of the Empire of Ethiopia Proclamation No. 165 of 1960 Negarit Gazeta 19th Year No. 2 Addis
Ababa 5 May 1960, 1st paragraph of the preface at V (here in after referred to as Civil Code). 60 Above, last paragraph of the preface, at VII.
61 Commercial Code of the Empire of Ethiopia Proclamation No. 166 of 1960 Negarit Gazeta 19th Year No. 3
Addis Ababa 5 May 1960, 1st paragraph of the preface, at V (here in after referred to as Commercial Code). The
Commercial Code is under revision with the aim to make it fit to the new developments.
62 Cao (n 48 above) 550. In 1970s, the theory failed since it was possible to identify the discrepancy between the
American ideals and the realty in developing countries. See Davis and Trebilcock (n 48 above) 14. Brian argues that law should be based on the unique forces and factors of each country and a good law in one location may have ill function or be dysfunctional elsewhere. BZ Tamanaha ‘The primacy of society and the failures of law and development’ (2011) 44 Cornell International Law Journal 209 219.
63 Blake (n 2 above) 166. David argues that a thought one fits all should be abandoned because the practice of
law and development in the past has shown that such an idea is a failure. But we need to have alternatives for a given country based on a detailed study of the uniqueness of a country’s legal regimes. See DM Trubek ‘The owl and the pussy-cat: Is there a future for Law and development?’ (2007) 25 Wisconsin International Law Journal 235-241. See also J Kroncke ‘Law and development as anti-comparative law’ (2012) 45 Vandervilt Journal of
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Dependency theory of law and development
The approach of modernization theory in trusting the developing countries as representing the public interest through socially responsible economic development was contested. By 1970s, neoclassical economists attacked the modernization theory by arguing that intervention was insufficient and excuse for rent seeking.64 Thus, dependency theory and the World Systems Approach have been developed as a result of the criticism to the modern theory.65 Dependency theory and World Systems theory are similar on categorizing the world into two such as ‘core/periphery’, ‘centre/periphery’ or ‘dominant/dependent’ depending on their wealth and power.66
Dependency theory as developed by Marx views development as political and intertwined with power dynamics unlike modernization theory that views development as relatively apoliticised.67 Marx provided analytical foundation of dependency theory that recognized ‘law as a reflection of the material force of production.’68 According to Marx and Engles, law is secondary to economics. The theory detested transplantation of Western law by arguing that the law institutionalise the inequalities of ‘trade’, and structure economic relations to the advantage of European colonizers.69 Most dependency theorists contended that the replacement of regimes dominated by elites with more populist governments that would adopt socialist economic
64 Ohnesorg (n 44 above) 239-40. Dependency theory of law and development was come into being as a
response to the failure of modernization law and development theory. Though both modernization and dependency theories recognize that liberalism and market imported from developed countries to developing countries as problematic, while dependency theory believed that capitalism is imposed upon developing countries is the cause for underdevelopment. Cao (n 48 above) 551; D Greenberg ‘Law and development in light of dependency theory’ in S Spitzer (ed) Research in law and sociology (1980) 135.
65 Ohnesorg (n 44 above) 232. The second Law and development theory began around 1989 which was the
result of changes in the economics academy since the 1970s and a neoliberal rule of law theory associated with the ‘Washington Consensus’ has been developed. As above. Modernization theory is different from dependency theory in view that creation of surplus capital as a necessary condition to the economic development, and developing countries would develop if they put in place the right policies as Europe did. Dependency theory, on the contrary, considers capital accumulation as a historically specific occurrence that is related with exploitation of developing countries by developed ones. Cao (n 47 above) 551-52. See also Davis and Trebilcock (n 48 above) 23.
66
Ohnesorg ( n 44 above) 241. Core- represents the advanced countries, whereas peripheral indicates poor countries. Ibid.
67 Cao (n 47 above) 551.
68 Above, 552. For detailed treatment of the dependency theory see Greenberg (n 64 above) 129-159. 69
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policies. This requires state ownership of basic industries, prohibit investment, and adopt protectionist tariff regimes.70
Dependency and world systems approach influenced deep scepticism towards legal development assistance in domestic legal systems. The theorists believed that rectifying the disadvantageous distribution of property and land is essential that implies the redistribution of property and the reform of oppressive land tenure regimes. Economic and social rights such as the right to education, health services, food, housing, employment and income are given emphasis. Then, instead of reforming national law a movement towards international law reform has made and the New International Economic Order (NIEO) movement of the 1970s came into being.71 One of the objectives of NIEO was to permit developing countries to enact laws to promote foreign trade and investment that would help them to reduce their dependence to developed countries. Thus, they tried to change the principle of most favoured nations and limit the amount of compensation payable for nationalization and expropriation of foreign owned property. There was also a movement to change the system of intellectual property right to encourage technology transfer.72
Dependency theory proposes that the development of Third World country depends on