An evolving role for law and lawyers in development

The World Bank’s new mission to end extreme poverty and boost prosperity on a livable planet is inextricably linked to the Rule of Law.  The concept of “Rule of Law” has long been variously defined and applied in contexts ranging from commercial law to human rights. In the area of sustainable economic development, Rule of Law can be understood as an ecosystem of institutions that enact, implement and apply just laws fairly, consistently, efficiently, transparently and ethically. Laws and their implementation are the essential link between policies aimed at reaching the goals of the sustainable development agenda and the actual realization of that agenda.  

In the field of development, the roles for law and strong institutions are never larger than in the concept of “sustainability.” Sustainability embodies the principles of inclusion, covering the equal engagement of women in the workforce, the inclusion of marginalized groups and communities and pathways for the young through education and opportunities. There is growing awareness within the global legal community that sustainability and Environmental and Social Governance (ESG) are not only a matter of good practice, but the subject of binding regulations. To be sustainable, development policies must include prudent fiscal management, the cultivation of human capital, and environmental and social safeguards that take account of future generations’ needs for a livable planet by responsibly managing the impact of development activities and the use of natural resources. Sustainability also means that infrastructure, healthcare and other social systems must be designed to absorb shocks from economic upheaval, civil unrest and violence, pandemics and natural disasters.

It's a tall order, made more challenging by the unique confluence of polycrises that are now threatening development agendas across the world: geopolitical conflict, violence, fragility, inflation, supply chain disruption, food crises, challenges of climate change, under-serving healthcare and education systems and the under-achievement of the Sustainable Development Goals (SDGs). Beyond the massive financing needed to achieve the SDGs, the Bank estimates that it will take an average of US$2.4 trillion per year between 2023 and 2030 to address the global challenges of climate change, conflict, and pandemics in developing countries. At the same time, many countries are facing fiscal constraints and the prospect of debt distress brought on by high debt, low growth, diminished tax receipts, currency devaluation, inefficient governance and policies incompatible with sensible solutions.  

During its recent World Bank-IMF Annual Meetings in Marrakech, the World Bank has launched a new vision, mission and strategy to evolve to meet these challenges, that require also the international development community, for which the involvement of the private sector is indispensable.  

A Private Sector Enabling Environment

To mobilize the investment capital needed from the private sector, government policy that promotes a private sector enabling environment (PCE) of legal and regulatory regimes must be in place , and countries must create the “justice ecosystem” to support them:

• Investment, financing, construction and operational risks in all areas of development are numerous and must be strategically allocated between government and private sector participants. Risks should be assigned to the parties who are best able to manage them, with third parties engaged where needed and available to mitigate risks through financing structures, insurance and other mechanisms. Governments need policies that reduce uncertainties associated with government commitments, currency exchange and repatriation and the commitment of agencies to whatever parts of the projects for which they are responsible. The enabling environment should support increasingly complex commercial and financial transactions, investment and exit structures and include well-regulated, transparent and liquid capital markets. It must also ensure legally enforceable contracts, technology transfers and the protection of property – including intellectual property.
• The paths to success for private sector sponsors and investors in unfamiliar markets with weak institutions, inexperienced partners and weak Rule of Law requires knowledge and advice underpinned by reliable data and analytics that will bolster investor confidence in the prospects of financial and operational viability – ultimately creating “bankable projects” that provide a predictable rate of return and manageable risks.
• PCE requires domestic banks, funds and insurers that are experienced, capable and willing to partner with private sponsors and lenders. For this reason, the World Bank agenda includes investments and advice to strengthen the financial sector of client countries both as to capital and know-how.  
• A legal landscape of legislation, regulation, regulators and judiciaries that supports private sector investment consistent with the Rule of Law and sufficient to boost confidence in investors to put their capital at risk.

Knowledge and Data 

The “billions-to-trillions” objective that accompanied the SDGs in 2015 was never solely about shoveling money into the SDGs. As stated at the time, “billions to trillions” was a call for a global change in mindsets, approaches and accountabilities to account for the realities in a developing world with highly varied country contexts.¹  The role envisioned for MDBs at the time was two-fold: “providing policy guidance, and development finance and financial support to clients.” ² 

Since then, MDBs and particularly the World Bank, have more directly and ambitiously embarked on an expanded knowledge agenda that doubles-down on policy guidance and goes beyond to include the strengthening of institutions, companies, banks and funds. Knowledge, data and analytics will increasingly drive the success of the development agenda.

The best rationale for pursuing a development agenda that is inclusive and sustainable and anchored in the Rule of Law is the morality and humanity of doing so. 

But, in addition to that, data and analytics provide evidence of the tangible economic and social benefits that come from an active Civil Society based on the Rule of Law – including increased investment and economic growth, more jobs, higher incomes, and greater tax receipts that enable more and better government services that further underpin the Rule of Law – thereby creating a virtuous cycle from which everyone benefits. Including women in the workforce on equal terms with men, for example, would increase countries’ GDP by 20% on average and over 35% in some cases, and create gains of $5-$7 trillion of economic gains.  Reliable data like this creates a compelling rationale for stakeholders throughout the government, private sector and society to create policies, laws, regulations and practices aimed at ensuring gender equality.

An evolving role for the legal development community

In this context, legal practitioners play an important and ever evolving role in the international development community . Within the World Bank, we have a large community of lawyers who provide legal services required to deliver on our mission and vision covering aspects ranging from operational delivery, financial model and institutional delivery. The World Bank Legal Vice Presidency is also working across a wide range of areas to advance the role of law in development:

• Participating and leading policy dialogue on the digital agenda and the use of digital technologies in development.
• Advising on the creation of “model laws” in areas of environmental and biodiversity protection, social safeguards and gender equality.
• Creating “tool kits” for operations in countries afflicted by fragility, conflict and violence and for the prevention of gender-based violence.
• Extensive training programs for government officials and lawyers in commercial and finance transactions to better equip them to work constructively with the private sector. 
• Supporting judicial programs aimed at efficiency and effectiveness and enhancing public confidence in critical national institutions.

World Bank lawyers also support cutting edge knowledge initiatives ranging from female genital mutilation to mining legislation in Africa. 

However, continuing the momentum of Marrakesh is also a call for evolution for the legal development community, and we expect to lead by example in this space through the following initiatives:

Law, Justice and Development Week

To spearhead this, the World Bank is convening its annual Law, Justice and Development Week 2023 (LJD Week) on November 13-15 in Washington, DC. – the world’s largest gathering of development professionals focusing on the role of law in development . The event will include the most prominent voices from the judiciary, governments, multilateral development banks (MDBs), financial institutions, the private sector, academia and civil society. This year’s theme – fittingly – is “Partnering for Impact:  Enabling and Mobilizing the Private Sector for Sustainable Development.” 

The LJD Week agenda is well-aligned with the Evolution Roadmap and the evolving role of law and lawyers.

Law Reforms and Judicial Capacity-Building Activities

There is also a need for ramping-up the World Bank’s advisory services and capacity-building for client countries and private sector firms with whom the World Bank Group collaborates in the area of law reforms and judicial and regulatory capacity-building. The World Bank Legal Vice Presidency is planning to step up its efforts to work with our counterparts in the Department of Development Economics and Equitable Growth, Finance, and Institutions Global Practice to support Country Management Units with country-based activities, advice and support in relation to development objectives: 

• Sectoral legal and regulatory reforms, with a keen focus on sustainability. 

• Building institutional capacity in governments, regulators and judiciaries.  

• Specific measures to develop global public goods such as model laws, conventions and good practices to foster the rule of law, align government policies with development objectives and to more effectively meet global challenges with national legislation. 

Conclusion

The world is under-achieving the Sustainable Development Goals and yet the SDGs are as vital and urgent as ever while the path to success is made more challenging by the polycrises. The World Bank will move aggressively on every front, and the role of law and the lawyer will play a more critically important role than ever before.

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Related

• Law, Justice and Development Week 2023—Partnering for Impact: Enabling and Mobilizing the Private Sector for Sustainable Development
• The World Bank's Bold New Vision

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Footnotes

[1] See “From Billions to Trillions: Transforming Development Finance Post-2015 Financing for Development: Multilateral Development Finance Development Committee Discussion Note” https://pubdocs.worldbank.org/en/622841485963735448/DC2015-0002-E-FinancingforDevelopment.pdf

[2] See Discussion Note, p. 2, para. 4.