a1 Department of Economics, Florida State University, Tallahassee, FL 32306, USA
If those with political power benefit from corrupt institutions, rulers might not adopt the rule of law so the ruling class can command a larger share of a smaller pie. An empirical analysis reveals that the size of government is larger in those countries that enforce the rule of law. If government expenditures provide some measure of the ability of the ruling class to command resources, this suggests that those with political power could benefit from imposing a fairer and more objective legal structure. Another conjecture is that those in power maintain corrupt governments to pay off their supporters and enhance their ability to remain in power. However, the rule of law is also positively associated with political stability, so better enforcement of the rule of law also enhances the ability of incumbent governments to remain in power.
(Online publication August 30 2011)
The authors gratefully acknowledge helpful comments from Tomi Ovaska, Thomas Zuehlke and two anonymous reviewers of this journal.