This is my first post. Given my particular research interests (law and economics, comparative law, judicial behavior), I will focus on legal reform and the impact of the Memorandum of Understanding (MoU) on the Portuguese legal system. Two initial quick notes:
(I) As I wrote in a document compiled by Nova, the MoU failed to grasp the complexity of problems faced by the Portuguese legal system. As a consequence, it is technically deficient and potentially counter-productive (for example, eliminating backlogs by June 2012 is simply unfeasible and undermines the credibility of the whole plan). Furthermore, the proposed reform of court districting is based on a clear misunderstanding: Portugal is NOT eliminating 200 courts but rather concentrating the management of such courts, which is a very different issue.
(II) The Portuguese court system is not worse than the Spanish, the Italian, the Greek or the French court systems (probably better according to the numbers produced by the World Bank Governance Indicators and the World Bank’s Doing Business). It is certainly better than most Central and East Europe, Latin America, Africa and China. Blaming the legal system for lack of FDI and economic growth is simply misplaced and a myth that covers other structural determinants. In fact, the inefficiencies of the Portuguese legal system are more likely to impose significant costs to small domestic investors and firms than to foreign investors and multinationals (they use international commercial arbitration anyway).
Thursday 30 June 2011
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What do you think of the Government's pledges on the topic of judicial reform? Do you think they address the issues facing the Portuguese judicial system?
ReplyDeleteIf the Government delivers on the current pledges concerning judicial reform, there will be significant improvements. But the same pledges were made in 2005. Socrates also announced a far-reaching reform of the legal system as a first priority (April 2005). And we will know how it ended...
ReplyDeleteThat's always been the problem, though, really. Reforms are promised but never actually carried through.
ReplyDeleteWill this time of crisis be enough to push us to finally go through with them? We can only hope, for now..
About point II:
ReplyDelete1) Could you please elaborate some more about the claim that it is a myth to blaim the legal system for the lack of economic growth while recognizing that it is a barrier for Portuguese SMEs?
2) It seems to me that the comparison of the Portuguese legal system with other countries has been made using other sources besides the WB databases. Could you please share those? Thanks!
The WB datasets are the least favorable to Portugal. Other datasets such as CEPEJ or OECD are much nicer to Portugal (but they are based on data provided by national governments). There is no empirical evidence that legal systems explain differences across growth and FDI within the EU27 (quite the opposite as shown by a recent JELS article). Low FDI, no economic growth and a bad legal system are all consequences (not a cause) of deeper structural problems. Improving the legal system will have a marginal impact on the economy unless many other things are changed.
ReplyDeleteIf a bad legal system is a consequence of deeper structural problems, then what are those deeper structural problems that cause a bad legal system, in your opinion?
ReplyDeleteThe deeper structural problems are cultural and anthropological that are reflected in extremely bad social norms and embedded in ineffective institutions (including both legal and political institutions). It is basically a problem of social preferences. Changing these norms/preferences requires brave decisions by policymakers, in particular, in the context of a society that has always hated change!
ReplyDeleteDear Nuno
ReplyDeleteMay I ask which society doesn't fit the stereotype of "a society that has always hated change"... it seems to me, IMHO, an argument towards some "ingrained property" of the Portuguese society which doesn't has any singularity on itself, being general in human societies. So, yes, a strong will is in fact needed to change the "status quo" but the will to change is there. Probably much would be done changing the rules or trimming the machine so that is more profitable to "do the right thing"(TM) than just "going around the rules"?
I actually disagree with respect to the premise that all societies hate change. Some hate more than others. That seems clear to me if we look at the last 200 years. What is less clear is why some societies hate change more than others.
ReplyDeleteAlthough a understand Nuno's - provocative - point, a couple of comments. First, as far as I know, CEPEJ places us as the 2nd slowest judicial system in Europe (only after Italy). So this is pretty bad, right? Second, I wonder is the problem is not only too little change (in terms of institutional change) but also "too much" change. When I say too much change is in relation to the legal framework judges apply. For example, every year you have in Portugal dozens of changes in tax law, normally brought with legislative authorizations approved with the budget law. Is this good for investment, legal certainty and implementation? Probably not. Not to mention that, every time a minister changes, policies in his or her jurisdiction always undergo major revisions without the consequences of the previous policy orientations being ascertained at all. What I mean by this is that sometimes we talk a lot about lack of reforms, when what I sometimes see is too many "reforms", too much change, often blind and inconsequential, not to mention that it undermines the notion that the state is committed to a particular direction in any given policy area.
ReplyDeletePedro: the CEPEJ dataset you cite has two problems (besides no external validation). It refers to a subset of cases. For many countries, unlike Portugal and Italy, it is not based on actual durations but "estimations" and such "estimations" are hardly credible. As to "too much change", sure that is correct, but follows the French-Italian tradition... "too much change" that changes too little...
ReplyDeleteGreat discussions! Welcome Nuno and thank you for joining the blog!
ReplyDelete"What is less clear is why some societies hate change more than others."
ReplyDeleteThis, I agree, is a key point. You got ideas about? Or, more to the point, can indicators be measured that allow for change?
For example, why don't laws have an experimental period (maybe they have and I'm just being ignorant) where they had to prove they are useful? Every (most) laws should have stated, measurable objectives, and evaluations of usefulness be in place to check them. If they don't fulfil their targets why should they go on in place? Just a thought...