In this paper, we show how these styles of different legal systems have developed, survived over the years, and continued to have substantial economic consequences. In our conception, legal origin is central to understanding the varieties of capitalism.
The paper is organized as follows. In Section II, we describe the principal legal traditions. In Section III, we document the strong and pervasive effects of legal origin on diverse areas of law and regulation, which in turn influence a variety of economic outcomes. In Section IV, we outline the Legal Origins Theory, and interpret the findings from that perspective. In Sections V-VII, we deal with three lines of criticism of our research, all organized around the idea that legal origin is a proxy for something else.
The three alternatives we consider are culture, politics, and history. Our strong conclusion is that, while all these factors influence laws, regulations, and economic outcomes, it is almost certainly false that legal origin is merely a proxy for any of them.
Section VIII briefly considers the implications of our work for economic reform, and describes some of the reforms that had taken place. Many developing countries today find themselves heavily over-regulated in crucial spheres of economic life, in part because of their legal origin heritage. Legal Origins Theory, and the associated measurement of legal and regulatory institutions, provides some guidance to reforms. Section IX concludes the paper.
