The Rule of Law, Collective Action, and Growth: Micro Evidence from Peru

Philip Keefer, Mauricio Espinoza, Álvaro Espinoza and Ricardo Fort

Economic Development and Cultural Change, 2026, vol. 74, issue 3, 1041 - 1078

Abstract: The mechanisms through which the rule of law supports economic development and the conditions under which it emerges are enduring issues. This study estimates the effect of historic social ties on rule enforcement and of rule enforcement on collective action. Data from nearly 1,000 vendors across 90 self-governed food markets in Lima reveal that markets with stronger social ties among founders exhibit more trust, better infrastructure, stronger formal enforcement of rules, and greater vendor rule compliance. They grew faster and better withstood the entry of modern supermarkets, highlighting the effect of social ties and the rule of law on development.

Date: 2026
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