We examine the relationship between urban characteristics in 1960 and urban growth between 1960 and 1990. Income and population growth move together, and both types of growth are (l) positively related to initial schooling, (2) negatively related to initial unemployment, and (3) negatively related to the initial share of employment in manufacturing. Racial composition and segregation are uncorrelated with urban growth across all cities, but in cities with large nonwhite communities segregation is positively correlated with population growth. Government expenditures (except for sanitation) are uncorrelated with growth; government debt is positively correlated with later growth.
This paper describes some characteristics of a dysfunctional legal system, and then proposes some reforms of the legal rules that would encourage private agents to rely on the legal system rather than mafia to structure their transactions. We argue - using both theory and the example of Russia - that legal rules should accommodate rather than interfere with the existing business practice. Moreover, in the transition stage, good legal rules should enable highly imperfect courts to verify violations of law and tell courts what to do when such violations occur.