Journal of Comparative Economics 37 (2009) 230–250 Contents lists available at ScienceDirect Journal of Comparative Economics www.elsevier.com/locate/jce Do judiciaries matter for development? Evidence from India Matthieu Chemin University of Quebec at Montreal, Case postale 8888, Succursale Centre-ville, Montréal, Québec, Canada H2X 3X2 article info abstract Article history: Received 3 April 2008 Revised 5 February 2009 Available online 12 February 2009 JEL classification: K0 K12 K40 K42 O12 O17 Keywords: Law and economics Institutions Courts Economic growth Industrial performance Chemin, Matthieu—Do judiciaries matter for development? Evidence from India This paper attempts to measure the causal impact of the speed of judiciaries on eco- nomic activity by using three novel instrumental variables measuring judicial procedural ambiguity and complexity. First, I find that Indian High Court amendments complicating procedures to treat a case are related to higher trial duration. Second, I find that temporally exogenous conflicting judicial decisions taken in India due to the Code of Civil Procedure’s ambiguity lead to higher expected trial duration as judges are required to spend consid- erable time in choosing between several conflicting views. By using spatial and temporal variations in the occurrence of enactment of amendments and conflicting decisions as in- strumental variables, I am able to measure the impact of judicial speed on credit markets, agricultural development, and manufacturing performance. Journal of Comparative Economics 37 (2) (2009) 230–250. University of Quebec at Montreal, Case postale 8888, Succursale Centre-ville, Montréal, Québec, Canada H2X 3X2.  2009 Association for Comparative Economic Studies. Published by Elsevier Inc. All rights reserved. 1. Introduction This paper contributes to the empirical literature related to the effects of institutions on economic performance. As institutions are arguably endogenous, one key question in this body of research is the issue of causation. The first issue is one of reverse causality: states with higher per capita incomes are able to devote more funds to improving institutions and thus have better institutions. The second issue is one of unobservable omitted variables, which may contribute to both judicial and economic outcomes, such as pessimism regarding a particular state’s prospects, or the “backwardness” of another. For these reasons, it is important to identify exogenous sources of variation in the quality of institutions if one wishes to relate it to economic performance. This paper focuses on the judiciary, a topic of first-order importance in this literature, and on its speed, an objective measure identified as a key problem in India. In this paper, I identify procedural complexity and ambiguity as two potential reasons for the slowness of the High Courts in India. While the Code of Civil Procedure (the act regulating how a case is to be processed) 1 was enacted at the central level in 1908, High Courts were awarded the right to amend it locally. I read and classify the 430 High Court amendments to the Code of Civil Procedure between 1971 and 1996, which allows me to E-mail address: chemin.matthieu@uqam.ca. 1 The Code of Civil Procedure (1908) contains India’s laws relating to procedures in suits and civil proceedings. They may be summed up as follows: procedures for filing civil cases, court powers for passing various orders, court fees and stamps involved in the filing of cases, rights of the parties to cases, namely plaintiff and defendant, jurisdictions and parameters within which civil courts must function, specific rules for case proceedings, right of appeals, and reviews and references. 0147-5967/$ – see front matter  2009 Association for Comparative Economic Studies. Published by Elsevier Inc. All rights reserved. doi:10.1016/j.jce.2009.02.001