ICR - A Proposal for a Judicial Risk Index for Brazilian States

Recent empirical research has tried to assess the influence of good institutions over economic development (North, 1990). Cross-country analysis has been the traditional approach, however these studies are criticized because of the institutional measures they employ. Indeed, these indexes could be blamed as being not objective and biased. Either the choosing of its components relies in the preferences of the researcher (Dam, 2007), or they are plagued with biases due to the use of attitudinal measures and opinion surveys (Glaeser et al, 2004). This research proposes a new institutional index and calculates it for Brazilian states. Instead of picking variables and assessing their weight arbitrarily, the methodology tries to check the effects of these variables in the likelihood of a contract being maintained by judiciary. The regression analysis of 86 contractual cases in 16 Brazilian states is used to determine the relevant variables and their coefficients, departing from the studies of Ribeiro (2007a). After this calibration, the index is calculated for all 27 Brazilian states. The variables in model are either determinants of judicial independence or proxies for the level of confidence in judiciary independence and seem to circumvent data collection problems in research