Legal origins theory

The legal origins theory claims that the two main legal traditions or origins, civil law and common law, crucially shape lawmaking and dispute adjudication and have not been reformed after the initial exogenous transplantation by Europeans. Therefore, they affect economic outcomes to date. According to the evidence reported by the initial proponents of such a theory, countries that received civil law would display today less secure investor rights, stricter regulation, and more inefficient governments and courts than those that inherited common law. These differences would reflect both a stronger historical emphasis of common law on private ordering and the higher adaptability of judge-made law. Recent contributions however have criticized the idea that transplanted legal institutions remained intact and have documented that indeed they evolve moved by how each country solves the trade-off between the uncertainty of judge-made law and the bias possibly injected into civil law by inefficient political institutions. Crucially, these latest studies show that considering both the endogeneity between legal traditions and the economy and the evolution of legal systems over time implies that civil law can often economically dominate common law.

While English common law originated in thirteenth century England and has then been transplanted through colonization and occupation to England’s ex-colonies (United States, Canada, Australia, and several countries in Central America, Africa and Asia), the Scandinavian common law was developed in Denmark and Sweden and the German common law sprang in Germany and Switzerland [Guerriero 2016a, p. 54]. These last four countries then exported their common law model to the respective colonies or to those jurisdictions (China, Greece, Japan, Romania, South Korea, Taiwan, Thailand, and Turkey), which were never colonized but borrowed their initial legal order from the European codes considered most advanced at the time [Guerriero 2016a, p. 54]. Civil law instead has its roots in Roman law, was incorporated by the Napoleonic codes first and then by both the Austrian and Russian Civil codes, and has been then introduced via mainly colonization and occupation into continental Europe, the Near East, Latin America, Africa, and Indochina. Bulgaria, Ethiopia, Iran, and Kazakhstan instead purposely borrowed their initial legal order from either France, Russia, or England [Guerriero 2016a, p. 54].

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