Efficiency of Justice and Economic Systems

AbstractThe growth of an economy depends not only on economic factors, but also on institutions, the citizens’ trust in them, by the sharing of values and expectations. The differences between public policies and institutions are often regarded as one of the key explanations of the wide differences in levels and growth rates of per capita across countries. Among the institutions that have the greatest impact on economic performance, the legal and judicial system plays a prominent role. Understanding how laws and regulations affect economic behaviour is fundamental in modern economies and the economy facilitates the identification of those that are, in each country system, the incentives to the litigation, the process of litigation itself and the costs, in order to verify the distributive impact of the different legal and judicial systems and what features they should have to encourage economic growth. The operation of a legal system may impact on many dimensions of development: equity, the optimal allocation of resources, and the increase in total factor productivity. Moreover, the role of the judicial system in determining its dysfunctions can affect economic growth. In fact, Italian economic growth has been and is definitely hampered by the length as well as by the civil and criminal justice processes, which reduces legal certainty and confidence, increases the risk of economic activities and therefore reduces the propensity to invest. The Italian judicial system has many efficiency and organization problems, resulting in a lack of its credibility. These are very intricate, and are the product of a mixture of features that are very difficult to isolate. The aim of this work is to assess the ways in which the administration of justice in Italy influences the choices and behaviours of the two main economic actors - households and businesses - analysing if there is any (a) symmetry in their preferences. In fact, there are many factors that determine the failure of Italian justice, and among these also the users of the justice services produce a collapse in justice system when they take legal actions only for postponing a payment or avoiding an obligation. Thus, the source of the problem and its resolution could be identified in the distorted incentives generated by all of the rules connected with the process