The Other Roles of Law: Signaling, Self-commitment and Coordination

Abstract

The existing literature on the role of formal law in economic development mainly focuses on the protective function of law. The dominant position of law and development scholars with expertise on Chinese law or economy downplays the role of formal law in China's economic development. This article, however, demonstrates that there is still inadequate evidence to support this position. In addition to pointing out that there is a role for formal law in China's economic development with respect to the enforcement of contracts and the protection of property rights, this article argues that the formal law has played a much more important role in China's economic development than is recognised by the existing literature if we also take into account the functions of formal law in signalling, self-commitment and coordination.