The World Economic Forum lists a weakening judiciary as one of the issues holding back economic reform in Pakistan. (Photo: Pakistan Today)
In Pakistan, the process of economic reforms has been painfully slow – a fact underlined by stalled or slipping progress on several international indices. On the World Bank’s 2015 Doing Business, Pakistan fell from 107th out of 185 countries to 128th. The World Economic Forum’s Global Competitiveness Index brought Pakistan down to 129th in 2014-15 from 124th in 2012-13. And the Fraser’s Institute report kept Pakistan at 124th out of 167 countries — the same spot it earned in 2013.
The World Economic Forum published its Global Competitiveness report this week, showing similarly weak progress. Three large South Asia Countries were ranked – India at 55th, Bangladesh at 107th and Pakistan at 126th. As compared to the last report, India jumped 16 places, Bangladesh by 5 and Pakistan slipped by one.
The United Nations chose “Ensuring indigenous peoples’ health and well-being” as the theme for this year’s International Day of the World’s Indigenous Peoples on August 9. (Photo: CIPE Staff)
What do property rights and rule of law have to do with the rights, health, and well-being of indigenous people? Quite a lot.
The worldwide indigenous population is estimated to be between 220 million and 350 million, spread across all inhabitable stretches of the earth. Land and the natural resources provided by the earth are central to many indigenous cultures and beliefs. The land provides identity, nourishment, home, and often very significant religious or spiritual significance.
Despite this central importance of land, indigenous peoples have historically been deprived of their rights to land by colonization – both political and economic. Communal understanding of ownership and the absence of the concept of land ownership left the door open to such abuses. However, as indigenous rights are becoming more widely recognized and celebrated, many countries are taking important steps to ensure respect for these rights, in order to improve the opportunities and well-being of their indigenous citizens.
Real estate investors are attracted to the United States because its strong legal system protects their investment and because of the easy availability of accurate information. (Photo: Wikimedia Commons)
I recently participated in George Washington University’s 2015 Global Real Estate Conference in New York. Having been invited to share CIPE’s work developing the International Property Markets Scorecard at the International Real Estate Federation’s (FIABCI-USA) annual meeting, which dove-tailed with the conference, I took the opportunity to educate myself on the current happenings in the real estate field and see how CIPE’s work might resonate with the professionals most connected to international investment in property.
Headliners at the conference included international representatives from such prominent companies as Morgan Stanley, CBRE, Knight Frank, and Cushman & Wakefield. Mostly I learned a great deal of “inside baseball” language and can now boast a broader vocabulary, but there was another theme that kept coming up. Whether talking about mitigating risk, conducting valuation of property, or trying to determining capitalization rates, it all came down to the need for reliable information and a stable environment that allows for confident investing.
This year I had a great privilege to serve as a judge at the International Rounds of the Philip C. Jessup International Law Moot Court Competition – the world’s largest moot court competition, with participants from over 550 law schools in more than 80 countries. The Competition is a simulation of a fictional dispute between countries before the UN International Court of Justice. The best teams worldwide qualify for the International Rounds, which are held yearly in Washington, DC.
In 2009 I was among such participants, representing Belarus at the International Rounds as a member of the team from the Belarusian State University. It was a great experience that allowed me to broaden my knowledge, practice real application of international law, acquire important skills, and meet the best international law students and professionals from around the world.
This time I was on the other side, which was a completely different but still rewarding experience. It is indeed inspiring when you see incredibly capable, intelligent, and skillful individuals pleading their case in front of you. No less outstanding were the benches of judges I was privileged to be part of – legal professionals from all over the world.
What is the “rule of law” and why does it matter for entrepreneurs? In this video, Democracy that Delivers for Entrepreneurs keynote speaker Hernando de Soto explains how the legal and institutional structures that entrepreneurs and business people in the developed world take for granted are sorely lacking in many developing countries. As a result, those who want to start a business are often forced to operate in the shadows — lacking formal registrations, licenses, and any protection for their property.
De Soto’s organization, the Institute for Liberty and Democracy (ILD), estimated that up to five billion people may be completely shut out of the legal system. The results can be catastrophic and even world-changing.
When Tunisian fruit peddler Mohamed Bouazazi had his cart, scale, and inventory confiscated by a police inspector in 2011, he was so despondent that he set himself on fire — igniting the Arab Spring that brought down several governments around the region.
The great Peruvian democracy advocate Hernando de Soto has spent much of his career focused on bringing informal entrepreneurs into the formal sector, where their rights are enshrined in and protected by law. When citizens have the tools to access to capital and a business environment that supports them, they are able to move up the development ladder from the survival entrepreneurship of the informal sector to the prosperity of the formal economy.
De Soto’s work encouraged an important new way of thinking about how to create opportunity where none previously existed. In so doing, he and his organization, the Institute for Liberty and Democracy (ILD) in Peru, have had a profound and positive impact on the lives of millions in Peru and around the world. CIPE’s first partner 25 years ago, De Soto’s and ILD’s work personifies the proven belief that strong markets require vigorous governance and vice versa, and that open participation in both markets and government are a foundation of democracy.
In this most recent Economic Reform Feature Service article, De Soto looks at the necessity of institutions—and specifically the rule of law—to create and nurture a successful entrepreneurial environment.
Article at a glance
Creating wealth through entrepreneurship requires combining different resources (for example, the parts of a pencil or those of a watch). Institutions are crucial to facilitating that combination.
To do all the things that entrepreneurs in developed countries take for granted – like dividing labor, using property as collateral, protecting personal assets, expanding markets, or creating economies of scale – entrepreneurs in developing nations need the standards that only legal institutions can provide.
The wealthy in developing nations have convinced the poor that no matter how talented or enterprising they are, they will never succeed. In fact, the world’s most successful entrepreneurs just have access to superior legal institutions.
Georgia’s Justice Minister Tea Tsulukiani is interviewed on Georgian television.
In October 2012, Georgia’s parliamentary elections resulted in the unseating of the incumbent United National Movement party by the opposition coalition, Georgia Dream, with 55 percent of the vote. In the wake of the post-Saakashvili era, the newly elected government is working tirelessly to define the priorities for democratic reform, governance, and rule of law.
Speaking at the Carnegie Endowment for International Peace in Washington, DC on February 22, Georgia’s newly appointed Minister of Justice Tea Tsulukiani — previously a renowned human rights lawyer — outlined her agenda for judicial reform. Throughout her speech, transparency, accountability, and impartiality were stressed as cross-cutting themes for reform initiatives.
Three key reforms highlighted by Tsulukiani included: universal free access to laws and penal codes; inclusion of civil society and the private sector in the drafting of new legislation; and strengthening the position of the defendant before a judge in the criminal procedure code.
This attention to democratic reform of the judiciary was warmly welcomed by many, as Georgia’s judicial system is perceived as highly corrupt with little to no independence from the regime. It is nearly impossible for ordinary citizens to win a court case against the state – the acquittal rate in Georgia is a miniscule 0.01 percent. This stark statistic comes into the light when you consider the fact that there are 300 state prosecutors, yet only 33 defense investigators. What this means is that judges are provided overwhelmingly with evidence for the prosecution, rather than a balanced argument.
The CIPE Development Blog provides coverage of the Center for International Private Enterprise and its partner network at work -- highlighting successes, drawing out lessons from failure, and exploring the broader issues of political and economic development. For more information visit CIPE.org.