World Bank Economic Review 30 (Supplement 1): S176–S187
Courting Economic Development
Abstract. We show that court enforcement uncertainty hinders economic development using sharp variation in judiciaries across Native American reservations in the United States. Congressional legislation passed in 1953 assigned state courts the authority to resolve civil disputes on a subset of reservations, while tribal courts retained authority on unaffected reservations. Although affected and unaffected reservations had similar economic conditions when the law passed, reservations under state courts experienced significantly greater long-run growth. When we examine the distribution of incomes across reservations, the average difference in development is due to the lower incomes of the most impoverished reservations with tribal courts. We show that the relative under-development of reservations with tribal courts is driven by reservations with the most uncertainty in court enforcement.
Keywords: economic development, court enforcement, legal uncertainty, tribal courts, Public Law 280, Native American reservations, income growth.
In brief
Uncertainty about how courts will enforce contracts holds back economic development.
A 1953 federal law gave state courts authority over civil disputes on some Native American reservations, while tribal courts kept that authority on others. Although the two groups of reservations were economically similar when the law passed, those under state courts grew significantly faster over the long run. The gap is driven by the poorest reservations with tribal courts, and specifically by those where court enforcement was most uncertain.
| Panel A. Design | ||
|---|---|---|
| Question | Does uncertainty in court enforcement hold back economic development? | |
| Setting | A 1953 federal law giving state courts civil jurisdiction on some Native American reservations | |
| Data | Long-run income across reservations | |
| Method | Reservations under state courts compared with economically similar reservations that kept tribal courts | |
| Panel B. Main findings | ||
| Long-run growth under state courts | Significantly greater | |
| Source of the gap | Lower incomes on the poorest reservations with tribal courts | |
| Where the gap is largest | Reservations with the most uncertain court enforcement | |
Summarized from the paper. See the paper for exact estimates and specifications.
Read and cite
- Published version, World Bank Economic Review
- Accepted manuscript (open access), Iowa State University
- DOI: 10.1093/wber/lhw027
Brown, James R., J. Anthony Cookson, and Rawley Z. Heimer. 2017. “Courting Economic Development.” World Bank Economic Review 30 (Supplement 1): S176–S187. https://doi.org/10.1093/wber/lhw027.
@article{heimer2015courting,
author = {Brown, James R. and Cookson, J. Anthony and Heimer, Rawley Z.},
title = {Courting Economic Development},
journal = {World Bank Economic Review},
volume = {30},
number = {Supplement 1},
pages = {S176--S187},
year = {2017},
doi = {10.1093/wber/lhw027},
url = {https://academic.oup.com/wber/article/30/Supplement_1/S176/2897440}
}
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