Does Rule of Law Enhance Growth? Evidence from Indian Judicial Appointments

Abstract

Independent courts are widely believed to support investment and growth, yet causal evidence on this link remains limited because judicial institutions are hard to vary exogenously and are intertwined with broader political change. We study a discrete institutional shift in India triggered by the Supreme Court’s 1993 reinterpretation of appointment provisions, which reduced executive discretion and increased the role of senior judges (the collegium) in High Court appointments. Mandatory retirement generates staggered transitions across High Courts: courts with older benches at the time of the reform turn over more quickly into the new appointment regime. Using this variation, we document changes in the composition of appointed judges and changes in adjudication of state-involving land and property-rights disputes, and we estimate downstream effects on private investment and structural transformation outcomes, with limited effects on outcomes less directly tied to expropriation risk. The results provide evidence that reducing government interference in judicial selection strengthens judicial independence in practice and is associated with economic development.