Friday, March 14, 2008

Rule of Law Helps Create Wealth

THE ECONOMIST--The better a government upholds the rule of law, the more likely its people are to be richer: every rich country, with the exception of Italy and Greece, scores well on rule-of-law measures (see chart above). Most poor countries do not.

4 Comments:

At 3/14/2008 8:17 PM, Anonymous Anonymous said...

Unfortunately, there is no information provided about the chart. Looks worth a visit to the World Bank website to find the original report.

 
At 3/14/2008 8:45 PM, Blogger VulcanHammer said...

If a country can't secure property rights, if it does not have the ability to uphold contracts b/w parties, or if it does not have a judicial system that is above corruption then it's economic and financial system is doomed. See Milton Friedman's "Capitalism and Freedom." I'm curious about outliers Italy and Greece though.

 
At 3/14/2008 11:43 PM, Anonymous Heretic38501 said...

Correlation equals causation?

I think not.

Perhaps only rich societies can afford an expensive legal culture such as ours. That would explain your outliers, some countries simply choose not to buy.

 
At 3/15/2008 1:28 AM, Blogger Juan said...

The way the scatterplot looks, maybe a logarithmic function might be a better fit than a linear one. Or is that just me?

 

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