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Rule of law and the size of government

Published online by Cambridge University Press:  30 August 2011

RANDALL G. HOLCOMBE  and
CORTNEY S. RODET
RANDALL G. HOLCOMBE*
Affiliation:
Department of Economics, Florida State University, Tallahassee, FL 32306, USA
CORTNEY S. RODET
Affiliation:
Department of Economics, Florida State University, Tallahassee, FL 32306, USA
*
*Email: holcombe@fsu.edu
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Abstract:

If those with political power benefit from corrupt institutions, rulers might not adopt the rule of law so the ruling class can command a larger share of a smaller pie. An empirical analysis reveals that the size of government is larger in those countries that enforce the rule of law. If government expenditures provide some measure of the ability of the ruling class to command resources, this suggests that those with political power could benefit from imposing a fairer and more objective legal structure. Another conjecture is that those in power maintain corrupt governments to pay off their supporters and enhance their ability to remain in power. However, the rule of law is also positively associated with political stability, so better enforcement of the rule of law also enhances the ability of incumbent governments to remain in power.

Type
Research Article
Information
Journal of Institutional Economics , Volume 8 , Issue 1 , March 2012 , pp. 49 - 69
Copyright
Copyright © The JOIE Foundation 2011

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