A Quantitative Assessment of the Efficiency of the Judicial Sector in Latin America

There is a widespread belief throughout Latin America that the judicial sector is not in a position to foster private sector development within a market system. The courts are overburdened and unable to dispose of cases in a timely fashion. As a result, frustrated litigants lose faith in the public justice system's ability to resolve their disputes. This loss of faith, in turn, causes private parties to factor added costs for judicial delay into their private transactions, and these added costs reduce economic activity and retard economic development. Because there are no viable alternative dispute resolution mechanisms in Latin American countries, the region urgently needs an efficient judicial sector to complement the market reforms recently introduced by many governments. An important implication of this observation is that the enhancement of the capability of the courts to satisfy the demand for dispositions is one of the most important, but least noted, aspects of Latin American economic development strategies. First, we report the results of surveys of court-users in several Latin American countries in an effort to identify the causes of dissatisfaction with the courts. Second, we show that simply increasing the amount of financial resources available to the judiciary will not necessarily increase the courts' efficiency. Finally, we look at a large sample of commercial cases in Argentina and Venezuela to identify court-related and litigant-related factors associated to the length of cost-adjusted time to final disposition of court cases. On the basis of this empirical work we identify the most fruitful courses of judicial reform in Latin America