Juridical certainty facilitates human interaction, including economic transactions,reducing their inherent uncertainty. In the economy, it translates into transparentand stable ?rules of the game?. This paper explores four channels through whichjuridical certainty fosters economic growth: lower transaction costs; reducedinvestment risk, notably in transaction specific assets; greater policy stability; andenhanced export competitiveness, through lower transaction costs, enhancedspecialization and greater reliance on export-oriented investments. We argue thatBrazil still suffers from a lack of juridical certainty, stemming from the poor qualityof the legislation, judicial activism and frequent government attempts to modify orinvalidate its past acts.
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