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nation and decline. Among the precondi-
tions for a steady course of economic
development is the security of private
property rights. Having failed to recognize
the importance of the judicial protection
of private property rights, the less
and least developed countries failed to
capture the essential understanding of
the economic development. Adhering to
the certain principles of the rule of law
and limited government is not merely an
attempt to restore the foundations of
development policy but an approach
aimed at the very understanding
of the evolu-
tion of economic development. Pretending
to adhere to the scientifi c principles
of economic development is nothing else
but a mere failure to acknowledge the
importance of the role of economic liberties
on which the evolution of development
is based. The adherence of principles
of economic and civil liberties is
built on the premise of limiting the coercive
power of the state which may, if left
unchecked, sooner or later result in the
capture by interest groups and, hence,
implementation of policies and laws that
would nonetheless hinder the prospects
of economic development in the name of
social justice. As James Madison noted
in 1788 in The Federalist Papers “It will
be of little avail to the people that the
laws are made by men of their own
choice, if the laws be so voluminous that
they cannot be read, or so incoherent
that they cannot be understood.” It is
nevertheless essential for less
developed countries to recognize
the failure of economic
dirigisme and foreign
aid in promoting economic
development. Instead, it
should be well-known
that the approach that
boosts development
and progress is not
the implementation
of certain policies
that temporarily
alleviate issues of
particular concern. It
is rather the awareness
of the importance of the
rule of law and protection of
private property rights. The
rule of law, ascertained on
the principles of its legal
origin, is not an end itself but a
C OMPARATIVE PLANNING
precondition for instituting the principles
of economic and civil liberties and
limits on the redistributive and coercive
power of the state and interest groups,
which is so essential to the course of
economic development. Civil and economic
liberties may encounter a heavy
resistance from small and powerful interest
groups that enjoy vast privileges from
social rigidities. But it should not be
forgotten that the existence of specially
treated interest groups with yields substantial
amounts of privilege for its
members and cost for other members of
the society. It is the strong infl uence and
power of these groups that forestalled
the status quo and detracted poor countries
from the steady road to prosperity
embodied in sound property rights, the
rule of law, free markets and limited
government.
References and
Additional Thinking
• Hayek, F. A. (1978). Law, Legislation
and Liberty, Vol. 1: Rules and Order.
Chicago, IL: University of Chicago
Press
• Olson, M. (1982). The Rise and Decline
of Nations: Economic Growth,
Stagnation and Social Rigidities. New
Haven, CT: Yale University Press
• Madison, J. (1788). Federalist No. 62,
in Hamilton A., Madison J. & Jay J.
(2003) The Federalist Papers, New
York, NY: Penguin Classics
• North, D. (1990). Institutions, Institutional
Change and Economic Performance.
New York, NY: Cambridge
University Press
(The views expressed in the write-up are
personal and do not reflect the offi cial policy
or position of the organization.)
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