The Empire of Law as a key for prosperity
There is no prosperity possible in civilized countries without the Rule of Law
The ancient Hammurabi code was developed in Mesopotamia in 1800 BC establishing the principles of justice with 282 laws that regulated the life from family matters to business affairs. This was the first attempt to civilize humanity by creating rules under which the society could grow and prosper.
In my view, these same principles prevail in today´s world. Any economy looking to develop must be based on the principle of “Rule of Law”
Having clear rules of the game is the basic principle to create trust in society and allow investments and economic growth to prosper because trust is created at all levels (business, legal, family, etc).
Having a closer look to underdeveloped economies, a clear common feature is the weakness of the application of the empire of law. This means that when a government weakens or controls the application of their basic justice system or erodes their basis by politicly influencing their independence is inducing poverty and increases its underdevelopment stage.
This is clearly a huge mistake not only in the short term for the economic prosperity of the country but affects the long-term ability to attract capital (economical and human) to be invested in their economies. Let’s be clear, without a proper rule of law there is no economic development possible.
Underdeveloped countries should take this into serious consideration. The 2021 Rule of law Index gives a clear picture of the situation. See the examples of countries like Venezuela (0.27) in the last place 139th, or Turkey (0.42) in 117th place. High potential and rich countries with serious underdevelopment trends accelerated by the weakening of their rule of law. It would be insane for any high quality investor to take the risk making investments in these economies with a horizon of capital recovery of more than a year.
Without rule of law, corruption is the rule. No civilized country can progress unless this is properly tackled. Therefore, in any recovery plan of an underdeveloped economy there MUST be a rule of law workstream strategy that is credible and implementable. If this is not the case, no matter how much financial support is provided, the country and its society will never succeed.
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