Legal Institutions and Transition Success

Tuesday, October 11, 2011, 10.00–11.30, Žofín Palace, Conference Hall

In cooperation with CERGE-EI

Keynote Speech:

Kenneth W. Dam, Professor of Law Emeritus and Senior Lecturer, University of Chicago, USA

Moderator:

Hana Lešenarová, Member, Corporate Council, Forum 2000 Foundation, Associate Director, Control Risks Deutschland, Germany/Czech Republic

Panel Discussion:

Boris Nemtsov, Politician and Opposition Leader, Russia 

Gérard Roland,Professor of Economics, University of California, Berkeley, USA

 

The panel started with news from Ukraine – Yulia Tymoshenko was found guilty, which means that she will not be able to run for the next presidential election. Hana Lešenarová emphasized that this example shows the weaknesses of legal institutions in the post-Soviet Union Countries, in particular the failure of the rule of law in Ukraine.

Kenneth Dam followed, emphasizing the role of research in the region related to the development of legal institutions. However, he noted that law in a book is not the same as law in practice. He mentioned that: “In terms of the book of Law, the US has to learn from Russia”. Mr. Dam emphasized the important link between the legal system (in particular property rights) and economic growth. He gave as an example China, an extremely successful country in terms of GDP growth, however it lags behind the US and other EU countries in terms of consumption growth. Mr. Dam highlighted that this is happening is due to the underdevelopment of the legal institutions. He concluded by emphasizing the role of two international organizations: the European Bank for Reconstruction and Development and the World Bank, which both do major work in the area of development by studying causes and consequences of economic growth in the region through the perspective of the development of legal institutions.

Boris Nemtsov followed by describing the Russian example. He emphasized: “In Russia we don’t have the Rule of Law, we have Dictatorship of Law. We have the Law of Putin”. He indicated that the main reason why this is happening in Russia is that the people and business care about their safety first but not about Rule of Law. He provided the example of the Yukos Company in Russia, which at the beginning was an independent private company but during Putin’s presidency, its owner died in prison and the company was nationalized. Mr. Nemtsov concluded that Russia must reconstruct its legal system.

Gérard Roland emphasized that differences between societies are the main cause for differences among countries’ legal systems and therefore countries’ development. He explained that Central European countries have better development due to the EU expansion. He highlighted that these countries mainly adopted the EU legal institution system and that made their transition process so successful.