The Rule of Law, Freedom, and Prosperity, 22nd Dec., 2010.

Todd J. Zywicki wrote an article for the Supreme Court Economic Review, titled "The Rule of Law, Freedom, and Prosperity."  In it, he explains the relationship between the Rule of Law and economic growth.

Over time the Keynesian model matured and evolved, giving rise to endogenous growth models and other related models. Regardless of the label, however, each of these growth models shared a similar core--a concentration on aggregate economic behavior, rather than the incentives and institutions that conditioned individual economic activity on the ground.

It was thus believed that with the "scientific" models of macroeconomic planning, it was only a matter of time before the economies of undeveloped countries would "converge" on those of the West. Instead, over the past several decades the gap between rich and poor has generally widened rather than narrowed. But this pattern of failure has not proved uniform. Ireland, Botswana, Chile, and the Asian Tigers of Hong Kong, Singapore, Taiwan, have all prospered even as neighboring countries have collapsed into misery. [ . . . ]

The most forceful advocate of the constitutionalism values of the rule of law was EA. Hayek. Hayek identified several characteristics of the rule of law. First, the rule of law requires that government action be "bound by rules fixed and announced beforehand."' Second, rules must be known and certain, so that individuals can conform their behavior to those laws.'2 Third, the rule of law requires equality in the sense that the law applies equally to all persons and does not prejudice some categories of people at the expense of others.13 The law may discriminate among different categories of people as necessary, but may not do so in such a way as to prejudice some or elevate some groups or individuals to the detriment of others.