Publication Type
Working Paper
Version
publishedVersion
Publication Date
6-2006
Abstract
This paper studies the transition of contract enforcement institutions. The prevalence of relational contracts, low legal quality, strong cultural preference for personalistic relationships, low social mobility, and highly unequal endowment form a cluster of mutually reinforcing institutions that hinder economic development. The cultural element per se does not necessarily reduce social welfare though it may slow down the legal development, while the real problem lies in endowment inequality and low social mobility. Thus a more equal distribution of resources may be the ultimate key to unravel the above interlocking institutions. These results are generally consistent with the empirical evidence.
Keywords
Relational contract, legal contract enforcement, institutions, endowmentinequality, economic development
Discipline
Growth and Development | Social Welfare
Research Areas
Applied Microeconomics
First Page
1
Last Page
29
Publisher
SMU Economics and Statistics Working Paper Series, No. 23-2006
City or Country
Singapore
Citation
HUANG, Fali.
The Transition from Relational to Legal Contract Enforcement. (2006). 1-29.
Available at: https://ink.library.smu.edu.sg/soe_research/906
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.