Spanish Confidence Summit
Dialogue on Legal Security and Growth
Since the dawn of political thought, people have always been uneasy to unravel the strings that structure the formation of complex human organisations, whether of a socio-political, economic or religious order, probably because of man’s natural need to understand the environment in which he lives and develops.
Maybe this is why the social sciences, and even economics, have evolved over the centuries, going from an academic perspective, observed in a thinker or philosopher’s static contemplation, to a more practical and scientific plane where they are conceived as useful tools of the future since they can open new and interesting paths for growth and progress based on the understanding of the present. As J. K. Galbraith said, “it is worth trying to understand the present, for the future will inevitably preserve important elements of what exists today. And the present, in turn, is a direct product of the past”.
In fact, from Aristotle to the scholasticism of St Thomas Aquinas, the mercantilism of the late Middle Ages, physiocracy as a precursor to economic liberalism and the structural questioning of economic liberalism by collectively based doctrines like socialism and communism, the history of economic thought has tried to explain the concept of property and the distribution of wealth.
With all the appropriate nuance, of course, we can say that never in history has man achieved the degree of wellbeing and social and economic progress that we enjoy in the West, where the foundation of the economic structure of its nations is sustained by a market economy modulated by the principles that make up a robust social state. In this situation, the economic doctrine of the twentieth and twenty-first centuries seems to share a common reflection in growth and the keys to strengthening it: the need to provide a solid, transparent and stable institutional framework as a lever for development.
However, the fact that our model is the one that most and best ensures citizen equality does not imply that it is unconnected to new challenges and immune to their current threats and risks. As the OECD warns in its recent Government at a Glance report, “[…] today national governments in OECD countries face an environment that is increasingly unpredictable, complex, and that extends beyond national borders. Many are under pressure to address the impact of globalisation and to respond to a backlash among significant segments of the population. The disruptive effects of technological change, an ageing population, high youth unemployment and high levels of public debt are leading to the polarisation and fragmentation of public opinion on a number of issues such as economic integration and migratory flows”.
The key lies in reforms to make the system more effective, efficient and operational, with greater guarantees of social protection. And in this need to constantly improve our structures, we must identify the “trust” factor as the keystone of the institutional architecture of the state and society, whilst it constitutes an obvious value leading to progress at the same time. Understood as confidence in institutions and in stable systems of co-existence, trust stands as a cultural concept that defines the degree of certainty and security enjoyed in them and ultimately responds to the effectiveness and credibility provided by the form in which they interact mutually and with other elements of society, and particularly with financial stakeholders, entrepreneurship and investment—drivers of activity and job creation.
In this section we have selected a set of reports, econometric studies and documents of various kinds related to the purpose of this summit. We provide them in an advisory capacity to support the work that will be carried out there with a common goal: to analyse how the security provided by the institutional framework has a real effect on the growth of the country, and therefore on the degree of citizen equality and wellbeing.
In the various documents provided here, we will see how legal security asserts its demands in the sphere of legislative technique and production, and particularly the way in which clear, practical and harmonised legislation helps to build a comprehensible regulatory framework that prevents lawsuits and disputes by effectively reducing room for interpretation in its texts. Real measurements and studies carried out by bodies of undisputed prestige and by reputable analysts from the economic and financial sector demonstrate that deficient legislative techniques and an overabundance of law or hyper-regulation leads to company shrinkage, rising costs and limits to the potential for company growth. They also show how that also affects specialisation or the deterrence of foreign investment.
The Council of Economists’ analysis of the legal system’s involvement in the economy shows how companies’ operating costs are considered fixed costs that directly influence the decline in business initiatives and how an oscillating jurisprudence can affect the credit market, causing it to retract and thereby making access to it difficult as a source of industrial development.
In partnership with the Bank of Spain and the Bank of Italy, the OECD has also been producing valuable reports that compare how the different European legal systems function according to evaluation indicators; a model of indicators followed by other reference documents, like the World Bank’s “Doing Business” or the one created by the European Commission for the Efficiency of Justice (CEPEJ). This goes without mentioning the data provided by Spain’s General Council of the Judiciary (CGPJ), which contain information related to the Spanish judicial system and its operations like the length of civil and commercial lawsuits, the rate of settlement, the human resources allocated, the use of new technologies, the degree of judicial specialisation, the litigation rate and other issues.
If it is essential to promote the mechanisms that create institutional strength formally, it is also vital to defend the principles of transparency, compliance with what has been agreed, codes of conduct and the commitment to dialogue as an alternative instrument for resolving conflicts between subjects of law. These are higher values that must be observed in the fabric of intersubjective judicial relations and that largely make up the concept of “trust” in the sense that will be used in this summit.
This is why this collection of documents includes others related to these issues, such as those studied last year at the Anti-Corruption Summit London 2016, in which Spain and the representatives of around 50 delegations from different countries, international organisations and civil society organisations pledged to multiply their efforts to combat one of the greatest threats facing democracies, which is the damage inflicted on citizens’ confidence in their institutions and to the image of the countries suffering from it. This collection contains the tools, actions and standards that Spain has adopted to promote open, transparent and accessible organisations in a way that helps to create the culture of fair play that society demands.
The use of alternative conflict resolution mechanisms between private individuals and/or companies is an important index for measuring the degree of autonomy and confidence shown by financial operators and stakeholders in the market and in the society where they pursue or intend to pursue their activity. The sense of engagement, respect, loyalty and good faith in commercial, business and legal relations, as well as the commitment to dialogue and agreement instead of lawsuits to resolve conflicts, are components that strengthen the necessary cultural change that must be adopted by developed societies and economies like Spain that want to adapt their system to provide more legal security, stability and trust.
Given all the above, in addition to an academic framework supporting the discussion and in-depth analysis that will take place at this summit, we offer the following reference documents to provide documentary support:
Based on distinct indicators, this documents gives the reader a precise overview of the effectiveness of the Spanish judicial system and its positioning in its neighbouring countries.
A necessary guide for the analyst of public service policy, public sector behaviour and good governance practice. A perspective of the new challenges facing the economies of the West and how they should be addressed by governments.
We can glean from data sources how a high degree of regulation or the complexity of the Spanish legislation distorts the market and increases the level of administrative burden for companies.
Find out how much it costs in Spain to start a company. An in-depth analysis of each of the indicators that define this cost.
A commitment to transparency: 50 delegations from different countries, including Spain, international organizations and the civil society, pledged to multiply efforts to combat corruption as one of the greatest threats towards democracies. Take a look at the instruments, actions and standards that Spain has adopted in order to promote open, transparent and accessible organizations, so that they contribute to generate a culture of trust within the Institutions
Through this work the author presents an economic analysis of law (law and economics) as an autonomous area of knowledge within Economic science and delves rigorously into the study of causal relationships between the design of laws and institutions, economic growth and social welfare. According to the author, the judicial system is a cornerstone for the effectiveness and execution of the legal system, being the element that translates into law (law in the books). It also offers an extensive and valuable bibliography with reference to the impact of the judicial system on entrepreneurship, innovation, access to credit, the size and competitiveness of companies and economic growth.
7. A selection of reports and studies by Juan S. Mora-Sanguinetti and other collaborators on the economic effects of the functioning of justice in Spain.
Throughout a large body of studies, the authors attempt to demonstrate how the efficiency of the judicial system has a positive impact on credit granting, the rental market, geographic mobility and macroeconomic variables such as entrepreneurship, innovation, the size and competitiveness of enterprises and economic growth.
- Evidencia reciente sobre los efectos económicos del funcionamiento de la Justicia en España Boletín Económico del Banco de España, enero 2016, p. 30-41, 2016, J. S. Mora-Sanguinetti
- El funcionamiento del sistema judicial: nueva evidencia comparada Boletín Económico del Banco de España, noviembre 2013, p. 57-67, J.S. Mora-Sanguinetti
- Entrepreneurship and enforcement institutions: disaggregated evidence for Spain
European Journal of Law and Economics, 2014, 40 (1), p. 49-74, M. García Posada y J. S. Mora-Sanguinetti
- Firm size and judicial efficacy: evidence for the new civil procedures in Spain
Banco de España, 2013, Documento de trabajo nº 1303, M. García Posada y J. S. Mora-Sanguinetti
- Is judicial inefficacy increasing the weight of the house property market in Spain? Evidence at the local level
Journal of the Spanish Economic Association, 2012, 3 (3), p. 339-365, J. S. Mora-Sanguinetti
- Credit, crisis and contract enforcement: evidence for the Spanish loan market
European Journal of Law and Economics, 2017, J. S. Mora-Sanguinetti, M. Martínez-Matute y M. García-Posada
Transparency and the fight against corruption as topics of great concern for citizens are added this time to the traditional overview of Justice for the year 2016, as new content and deemed worthy of a special study. The document analyses the extension of the agreement signed in 2014 with the Transparency International Organization (TI), the transparency portals of the Superior Courts of Justice, the activity developed by the Corruption Causes Support Unit and the development of the Repository of Causes for corruption.
9. European judicial systems: efficiency and quality of justiceEuropean Commission for the Efficiency of Justice (CEPEJ), 2016.
An efficient judicial system is necessary in order to ensure economic development, as it influences the development of financial markets, facilitates and attracts investment and the volume of activity. At the same time it stimulates entrepreneurship, the creation of companies and increases external competitiveness. In this study we analyse the endowment and structure of judicial systems in our environment from a comparative point of view which allows us to gauge its degree of strength and efficiency in the European context.
These papers about the Spanish economy try to explain the convergence between law and economics and to demonstrate the enormous possibilities of cooperation between both scientific disciplines. Within these works are documents that deal with the Spanish justice system, its functioning, its effectiveness and its economic impact.
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