BASSEL, On Laws and Development

The role of Laws in Development: Development process is essential for improving market conditions, development of societies and cultural transition. But markets always produce externalities like oligopolies, Monopolies and negative externalities that is the main reason why Law is crucial for attaining development. Development is a merger between economic and political development Through the development process many obstacles arise that hinder the process of true development, on the economic level for example there might be transaction cost problems and market failures. On the political side attention to human rights, cultural and social costs, planning and institutional mechanics of policy making, all of these economic and political obstacles make the role of law crucial for the process of development. The focus on rights, constitutions, government capacity or judicial independence may all be to the good but without a sharp sense for how one is intending to affect the economy; it is hard to compare building the rule of law with leaving the economy to operate more informally. In this the focus on law as a development policy shares a great deal with other efforts to replace political and economic thinking with general appeal to technical expertise and ideas about best practices. In my opinion since the process of development is not just about growth but what and how to grow, that is why its very important to analyze development in the context of political, economic and social aspects, and here the rule of law plays an important factor for achieving the right policies. Formalization: Formalization is very important for enhancing the chances for successful economic activity, it helps to strengthen confidence for investment, promote transparency and reduce transaction costs since for example the existence of contracts can facilitate the process of business making I believe that the focus on formalization would then lead us to consider the informal sector which constitutes a large portion of the economic activity in the Arab countries and provides a vital source of entrepreneurial activities, so the arguments raised that the informal sector hinders economic activity is fairly weak as empirical evidence has proven that sector to be vital for the economic development although it doesnt have strong formalization as for example there are no contracts or tax obligations. Corruption Corruption is a core issue in the Arab countries as they faced a wide range of inequalities and

misdistribution of resources which puts the rule of law in the front of the amendments being imposed to the system in the Arab countries. The author argues that cases of corruption is not always linked with slower economic growth and he mentioned the example of accepting bribes for legally mandated services but evidence from Arab countries case puts the authors assumption under question since governments corruption in Arab countries was a main obstacle that hindered confidence in the markets and consequently investments that could promote economic development.