Role of judiciary in economic development:

(Sohaib Zafar, Multan)

Political freedom and a competent judiciary, like natural resources, energy resources, and technical resources, play a significant and critical part in the economic development. The issue therefore becomes, how can the judiciary play a vital role in economic development? The answer is to ensure the security of property rights and their application, as well as to resolve business disputes quickly.Laws even best practice substantive laws cannot bring Rule of Law in country unless there is no effective enforcement. Administration can enforce some technical laws but rule of law in economic terms means guaranteeing property rights security, enforcing the contracts etc. can only be established when there is efficient justice system. Efficient justice system requires judiciary to resolve conflicts against private parties and also with state, results, stimulating investment both foreign investment and local, bringing positive innovations, competition and developing financial markets. Both economic and legal scholars agree on the fact that judiciary plays vital role in rule of law.

A well-functioning legal system is necessary for both society and corporate activity. The length of a trial is important since it determines judicial efficiency. When rulings are made in a fair amount of time, the judicial system is efficient. The Pakistani judiciary is confronted with tremendous challenges, with pending cases being the most prominent. Report issued by Judicial Commission of Pakistan on 31st August 2021 states around 2.2 million cases are pending in country’s courts.While there is a massive backlog with the judiciary, the current Chief Justice of Pakistan, MianSaqibNisar, urged the high courts to determine a matter within three months while presiding over a recent meeting of the National Judicial Policy Making Committee (NJPMC).

He said that, because to a lack of adequate legislation, subordinate courts are issuing judgments based according to their own discretion rather than following the law and instructions established by the SC. He claimed that parliament needed to alter centuries-old colonial legislation. Ineffective judicial systems, he claims, are a threat to the state and society. Which mean that is if treatment is available for patient but not delivered it on time, its totally useless.

Maria Dakolias noted in a speech on November 14, 2003 that socioeconomic progress in the twenty-first century is not merely about the balance of payments, building infrastructure, or boosting tax collection. It's becoming more about the rule of law. According to World Bank report, “firms in Brazil, Peru, and the Philippines report that they would be willing to increase investment if they had more confidence in their nation’s courts The World Bank and numerous other donor institutions have financed judicial reform programs in more than two dozen developing nations and transition economies in recent years, recognizing the relevance of solid judicial systems to effective governance and economic success. Improved laws can make only little difference where legal institutions are ineffective.

Foreign Direct Investment is imperative for economic development as it is regarded as a key source of foreign exchange, assisting in the alleviation of the balance of payment restriction on economic growth. Furthermore, it adds to the domestic investment resources, brings new technology and creates employment opportunities. Inflows of foreign direct investment (FDI) into Pakistan averaged over $2.3 billion during the past four years, but fell below $1.8 billion in the first eleven months of the current fiscal year. Our yearly FDI intake, even at $2.3 billion, is less than half of our monthly merchandise import cost. To assist alleviate the balance of payments concerns, considerably larger FDI inflows are clearly necessary. Why foreign investor is reluctant to invest capital in Pakistan? It might be due to inefficient judicial system.

Smooth environment is prerequisite for foreign investment. A state should provide business environment to attract foreign investors. Business conflicts are an inevitable part of business, and every owner will ultimately face conflict regarding their operations. Business operates through contracts and the legislation that governs them. Contracts have far-reaching legal implications that might jeopardize company's future. Written contracts that are properly formed defend business’s interests and reinforce all of the parties' rights in any particular transaction. Commercial conflicts can be resolved in court, and it is critical that they be resolved swiftly. According to World Bank Doing Business report (2019) it takes 1,072 days on average to resolve commercial conflict in Pakistan. Investor will avoid investing in the country where it takes years to resolve business conflicts. As time is money, no investor will tie down his money in long period due to commercial disputes. There is concept of time value of money in business which states that amount of money worth more today than in future date. Efficient judiciary can built smooth business environment and foster innovation and can attract foreign investment.
 

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