The Pakistan Development Review 45 : 4 Part II (Winter 2006) pp. 1301–1321 Judicial Systems and Authoritarian Transitions HILTON L. ROOT and KAREN MAY * INTRODUCTION: AUTOCRACY, LAW AND DEVELOPMENT For several decades, development policy specialists and donor agencies have championed investment in the judicial systems of developing countries to promote economic growth and, eventually, democracy. The assumption of a causal link among these three phenomena motivates donors’ investments in the physical and human capacity of the legal system. Some reforms are narrowly focused—better enforcement of property rights and contract law—conducive to enhanced trade and investment. Although these narrow reform programs imply that political liberalisation is an ultimate objective, studies are unable to substantiate causality between the rule of law, economic growth and democracy [Carothers (2003)]. Autocratic regimes may establish courts to protect the property rights of regime insiders and to expropriate the rights of outsiders. In our view a rule of law will have emerged only once the state has achieved legitimacy in the hearts and minds of citizens. The idea that better rule of law would generate economic growth, which would in turn build constituencies for democratic reforms will be questioned in this paper. An alternative view will be suggested, most notably the alignment of national identity with the institutions of the state is critical to establishing a rule of law. THE ECONOMIC ROLE OF THE COURTS ACCORDING TO REGIME TYPE The consequences of judicial independence for resource distribution will vary according to regime type. A judicial system and with it judicial politics can be used as a tool to enhance political survival of leaders, within authoritarian regimes just as in democratic ones. Courts may help reduce costs of commercial transactions for private citizens in both contexts. Democratic leaders face incentives to provide such protection broadly, as with the SEC regulations on investment in the U.S. In contrast, autocrats face incentives to provide selective benefits that maximise control over economic activity. 12 An effective legal system depends on coordination with other state functions, which are also politically controlled. Impartial judgment by the courts depends on appropriate police work for evidence gathering, and enforcement of decisions after the court has Hilton R. Root <hroot2@gmu.edu> is affiliated with George Mason University, USA. Karen May is a graduate student at Claremont Graduate University, USA. 1 Control does not equate with central planning. Control may mean that the market is allowed to function freely in certain sectors, whereas in others economic activity is tightly controlled through licences to operate in other sectors.