Authors:

• Juan Mora-Sanguinetti, Bank of France, Paris and Bank of Spain, Madrid
• Rok Spruk, University of Ljubljana, School of Economics and Business

Keywords:

Judiciary | Efficiency of the judicial system | Comparative advantages | Structural transformation | Institutional quality | 

Abstract

We test whether enforcement institutions shape regional specialization. Using administrative data for all Spanish provinces (NUTS-3) over 1999–2014 with jurisdiction-specific extensions, we measure judicial efficacy by court congestion in administrative and civil courts and identify its causal effect with historical, region-level instruments: foral civil-law stocks and special administrative tax regimes. We find that weaker enforcement shifts specialization away from manufacturing and toward services. In administrative-court specifications, a one standard-deviation increase in congestion rate lowers the manufacturing share by about 12–19% and raisesthe services share by 13–27%. Civil-court effects are smaller but of the same sign. Results are robust to redefining outcomes as complex vs. non-complex activities, aggregating outcomes to NUTS-2, alternative Bartik instrument structures, and identification-robust inference checks. The evidence implies that strengthening judicial enforcement, especially in the administrative jurisdiction, tilts economies toward contract-intensive production and slows premature deindustrialization.

The Sustainable Development Goals (SDGs) addressed in the article are:

• SDG 8 – Decent work and economic growth
• SDG 10 – Reduced inequalities
• SDG 16 – Peace, justice and strong institutions

The article is published in:

The annals of regional science (Springer Nature)

The content is freely accessible at:

Do enforcement institutions matter for economic specialization? Province-level evidence from Spain.