What does the rule of law mean?
The rule of law is another way of saying that laws, as they are written, are applied equally to everyone without regard for wealth, political power, or status. If an individual or company breaks the law, they face the consequences.
It is often taken for granted in countries with a strong rule of law that people respect the rules. But that isn’t the case everywhere. In countries where the rule of law is not as prevalent, the law as it is written is applied unequally.
How does the rule of law encourage economic development?
Many business contracts are assessed on the probability that the agreement will be a profitable one. Included in that assessment is the possibility that the other party will fail to uphold their end of the trade, and what recourse they would have to regain any damages they incur.
In countries with a strong rule of law, contracts can be upheld and damages can assessed in a court following some wrongdoing. In countries without a strong rule of law, it’s possible that the more powerful party would be able to get away with breaking contracts and not paying any restitution.
What is the World Trade Organization?
The World Trade Organization is an intergovernmental organization that is concerned with the regulation of international trade between nations. Click here to learn more.