Legal origin and development heterogeneity: Distributional evidence from cross-country panel data
Year: 2026
Type: article
Abstract: This paper re-examines the relationship between legal origin and economic development by challenging the assumption that legal systems exert a uniform effect across countries. Although the law-and-finance literature has long treated legal origin as a deep institutional determinant of development, empirical findings remain mixed and highly sensitive to model specification, sample composition, and the inclusion of broader institutional controls. The paper argues that part of this inconsistency may stem from an overreliance on average-effect frameworks. If the developmental relevance of legal systems varies across country contexts, mean-based estimates may obscure rather than reveal the underlying relationship. Building on this premise, the study develops a stage-contingent interpretation of legal origin. It proposes that civil-law systems may function as institutional scaffolds in lower-development settings by supporting codification, predictability, and administrative coordination, while the same institutional features may become less advantageous in higher-development environments that place greater weight on adaptive governance, flexible contracting, and innovation-oriented institutional adjustment. Using an unbalanced panel of 143 countries over 2000–2023, with a 109-country estimation sample, the analysis combines benchmark panel models, panel quantile regression, and supporting machine-learning diagnostics. The benchmark estimates are mixed and specification-sensitive, indicating that legal origin is not adequately summarized by a single mean coefficient. By contrast, the quantile results reveal a clearer distributional pattern: civil-law origin is positively associated with development at lower quantiles of the conditional income distribution, but this association weakens and turns negative at higher quantiles. Supporting diagnostics are consistent with the view that the average legal-origin association becomes limited once observable confounding is modeled more flexibly. The paper reframes the legal-origin debate in conditional rather than universal terms and shows that distribution-sensitive approaches are especially useful when historically embedded institutional variables are unlikely to exert constant effects across heterogeneous country contexts. The findings should be interpreted cautiously, as the estimation sample under-represents the lowest-income economies and the quantile analysis captures cross-country structural heterogeneity rather than within-country developmental transitions.
Authors: Güray Küçükkocaoğlu, Nimet Çakır
Institution: Başkent University
Language: English
Subfield: Development
Field: Social Sciences
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $1,180
OpenAlex ID: W7163997614