The rule of law and economic development

There can be no economic growth, sustainable development, or poverty, hunger or unemployment eradication in an environment lacking the rule of law.

Governments, due to the absence of clear criteria and standard policy settings, took up different policies for economic development; however, they unanimously agreed that the rule of law is the foundation on which economic development stands.

His Majesty’s Sixth Discussion Paper struck a chord with the statement: “The rule of law is the pillar on which democracies and prosperous economies and societies stand.”

The King also added that “we cannot achieve sustainable development and youth empowerment, including the achievement of national growth plans, if we are unable to guarantee the development of government administration and management through the principle of the rule of law”.

The rule of law creates economic activities and regulates financial activities, corporations, agreement contracts, etc.

Admittedly, to arrive at a legal model of governance that contributes to economic development is no easy matter. 

Blending the economic model with the legal model to govern business activity is, indeed, different for every country. 

Each country has its own circumstances through which it identifies and develops its investment schemes for the achievement of its national goals. 

Nonetheless, there are three fundamental principles that need to be taken into account when talking about sustainable development.

The first is that the legal foundations for market activity must be fair and transparent, effective and just.

Economic activity requires the trust that contractual obligations and property rights will be respected and protected, and a reliable judiciary will efficiently enforce them.

Currently, Jordan’s legislative frameworks needs revision, starting with Jordan’s Companies Law and Banking Law to the Labour Law, tax and bankruptcy regime as well as financing and more.

These laws need to be revised within a comprehensive framework, along with the Kingdom’s sustainable development plan, to create a balance of rights between and among all stakeholders:  majority and minority in the companies, creditor and debtor, employers and employee, taxpayer and public Treasury, etc.

The second is that development has to be based on the principle of good governance, meaning that effective public administration requires a reliable police and security establishment apparatus, and trust in its capacities and capabilities to eliminate corruption.

It is, therefore, paramount that we increase the efficiency levels of government as well as the quality of its services in order to control corruption.

And this necessitates citizens’ involvement in policy development through increased ability to express their opinion and hold government to account.

This raises the question whether the government should develop its own mechanisms to encourage accountability.

The third is that development means or requires human rights guaranteed by the state, including the social, economic and cultural rights.

When a person is under restrictions, he has less of a possibility to become creative and innovative. 

It is, therefore, important to redefine the relationship between man and country. 

Development cannot be imported or replicated; rather, it requires that people withstand its burdens, for, there cannot be sustainable development without having complete rights. Indeed, the achievement of fundamental rights makes one an effective contributor working for the benefit of his/her country as opposed to him/herself.

His Majesty outlined the challenges and how to address them through reform.

A national development plan in which respect for the rule of law is paramount offers a solution to the problems of the market as well as supports and increases national production, increase foreign investment and consolidates relations with the global economy.

The writer, PhD in business law from the Université de Nantes, France, focuses his practice on corporate, finance, infrastructure and transactional matters. He contributed this article to The Jordan Times.