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Institutions have been defined as ‘'the rules of the game in society, or more formally, are the humanly devised constraints that human interaction'.’ One of the most effective of these rules of interaction is the '‘law'’. The relationship between the legal Institutions and economic development has interested the academic fraternity for far too long, across the globe.

An efficient institutional structure resolves the uncertainties in the market and the problem of asymmetric information and thus, creates a positive exogeneity, ensures the efficient distribution of the resources and makes a positive Impact on the functioning of the economy. It further ensures that the economic transactions are done in a cheaper and a safer way, prevents wastage of resources, contributes in prevention of corruption and ensures transparency and accountability. Hence, it can be said that a strong institutional structure increases the efficiency and quality of trade in a country.

Law is specific and compelling in nature, and may cause both, deprive individuals of rights and benefits, and also protect another individual'’s rights and freedoms, or economic rights and benefits from unlawful acts. Economy is the main factor that affects the community, either positively or negatively. The close interlinkage between law and economy keeps the States standing, both, nationally and internationally.

In India, the lawmakers are gaining increasing consciousness about the importance of rule of law, in order to boost the economic development of the country. While addressing the event at Bihar Chamber of Commerce and Industry, the then Vice President, Shri Hamid Ansari had stated that the rule of law is an essential pre-requisite for economic growth and for drawing foreign investments.

However; despite realising the same, the development of the legal institutions in the country are quite at a standstill. The '‘rule of law'’ is yet a fancy phrase, and transparency and accountability is a long way off. In this light, this article delves into analysing the impact of developed legal institutions in USA on its economic growth and suggest recommendations that should be applicable in the Indian set up.

USA has been considered to be an economic superpower of the world. While, China has been considered a very strong competitor for the top spot, it has been USA that has been making the edge, as yet. A country becomes an economic superpower, based on the perceptions of the other countries around the world, and this perception has recently been collected and analysed by the Pew Research Center.

Across 38 nations polled by Pew Research Center, a median of 42% consider the USA to be the world’s leading economy. Across all of the countries surveyed in Latin America, as well as most in Asia and sub-Saharan Africa, people tend to view USA as the top economy of the world. The gap between USA and China is narrowing, but that aspect is irrelevant to the theme of this paper. The pictorial representation provides us an estimate of countries which view USA as the economic superpower.

Which is true about USA as the leading economy?

A) A majority of the nations consider the USA to be the world’s leading economy

B) Only 38 nations of the world see USA as a leading economy

C) Among the polled nations less than half consider the USA to be the world’s leading economy

D) All the above