This indicator measures the extent to which individuals and firms have confidence in and abide by the rules of society; in particular, it measures the functioning and independence of the judiciary, including the police, the protection of property rights, the quality of contract enforcement, as well as the likelihood of crime and violence.
Countries are evaluated on the following factors:
- public confidence in the police force and judicial system; popular observance of the law; a tradition of law and order; strength and impartiality of the legal system;
- prevalence of petty crime, violent crime, and organized crime; foreign kidnappings; economic impact of crime on local businesses; prevalence of human trafficking; government commitment to combating human trafficking;
- the extent to which a well-functioning and accountable police force protects citizens and their property from crime and violence; when serious crimes do occur, the extent to which they are reported to the police and investigated;
- security of private property rights; protection of intellectual property; the accuracy and integrity of the property registry; whether citizens are protected from arbitrary and/or unjust deprivation of property;
- the enforceability of private contracts and government contracts;
- the existence of an institutional, legal, and market framework for secure land tenure; equal access to land among men and women; effective management of common property resources; equitable user-rights over water resources for agriculture and local participation in the management of water resources;
- the prevalence of tax evasion and insider trading; size of the informal economy;
- independence, effectiveness, predictability, and integrity of the judiciary; compliance with court rulings; legal recourse for challenging government actions; ability to sue the government through independent and impartial courts; willingness of citizens to accept legal adjudication over physical and illegal measures; government compliance with judicial decisions, which are not subject to change except through established procedures for judicial review;
- the independence of prosecutors from political direction and control;
- the existence of effective and democratic civilian state control of the police, military, and internal security forces through the judicial, legislative, and executive branches; the police, military, and internal security services respect human rights and are held accountable for any abuses of power;
- impartiality and nondiscrimination in the administration of justice; citizens are given a fair, public, and timely hearing by a competent, independent, and impartial tribunal; citizens have the right to independent counsel and those charged with serious felonies are provided access to independent counsel when it is beyond their means; low-cost means are available for pursuing small claims; citizens can pursue claims against the state without fear of retaliation;
- protection of judges and magistrates from interference by the executive and legislative branches; judges are appointed, promoted, and dismissed in a fair and unbiased manner; judges are appropriately trained to carry out justice in a fair and unbiased manner; members of the national-level judiciary must give reasons for their decisions; existence of a judicial ombudsman (or equivalent agency or mechanism) that can initiate investigations and impose penalties on offenders;
- law enforcement agencies are protected from political interference and have sufficient budgets to carry out their mandates; appointments to law enforcement agencies are made according to professional criteria; law enforcement officials are not immune from criminal proceedings;
- the existence of an independent reporting mechanism for citizens to complain about police actions; timeliness of government response to citizen complaints about police actions.
Relationship to Growth & Poverty Reduction
Judicial independence is strongly linked to growth as it promotes a stable investment environment. 1 On average, business environments characterized by consistent policies and credible rules, such as secure property rights and contract enforceability, create higher levels of investment and growth. 2 Secure property rights and contract enforceability also have a positive impact on poverty by granting citizens secure rights to their own assets. 3 Research shows that people who do not have the resources or the connections to protect their rights informally are usually in most need of formal protection through efficient legal systems. 4
The indicator is an index combining up to 22 different assessments and surveys, depending on availability, each of which receives a different weight, depending on its estimated precision and country coverage. The Rule of Law indicator draws on data, as applicable, from the Country Policy and Institutional Assessments of the World Bank, the African Development Bank, and the Asian Development Bank, the Afrobarometer Survey, the World Bank’s Business Environment and Enterprise Performance Survey, the Bertelsmann Foundation’s Bertelsmann Transformation Index, Freedom House’s Nations in Transit and Countries at the Crossroads reports, Global Insight’s Business Conditions and Risk Indicators, the Economist Intelligence Unit’s Country Risk Service, the World Economic Forum’s Global Competitiveness Report, Global Integrity’s Global Integrity Report, the Gallup World Poll, the Heritage Foundation’s Index of Economic Freedom, Cingranelli-Richards’ Human Rights Database, the International Fund for Agricultural Development’s Rural Sector Performance Assessments, the French Government’s Institutional Profiles Database, the Latinobarometro Survey, Political Risk Service’s International Country Risk Guide, the United States State Department’s Trafficking in Persons Report, Vanderbilt University’s Americas Barometer, Institute for Management and Development’s World Competitiveness Yearbook.
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- 3. Chong, Alberto and César Calderón. 2000. Institutional quality and poverty measures in a cross-section of countries. Economics of Governance 1(2): 123-135. Dollar, D and A. Kraay 2002. Growth is Good for the Poor. Journal of Economic Growth 7(3): 195-225. World Bank. 2005. Pro-Poor Growth in the 1990s: Lessons and Insights from 14 Countries. Washington D.C.: World Bank.
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