manufacturing to control for differences in growth potential across industries. Industries with large market shares initially may have less growth potential than industries with small market shares initially Growth k=Constant +P,m Country indicators +P, m+l.m+n indicators +Bmn+. (Industry j share of manufactur ing in country k in 1980) +Bn+n+2. (External dependence US industry j. Financial developmen t country k)(la) +Bm+n+3. (Intangible assets/Fix ed assets US industry j Property rights country k) The law and finance literature asserts that financial markets are more developed in environments with better law and order (and creditor rights). In this view, financial development is the result of a good legal framework and the supply of external financing is not independent of the quality of the legal framework. We therefore also estimate a variation on the previous specification that uses the law and order index of a countr rather than its financial development to measure the link between a sectors financial d ependence and gre owth(equation 1b) Growth /.=Constant +BI.m Country indicators +Bm+l.+m. Industry indicators + Bnanl (Industry j's share of manufactur ing in country k in 1980) Bran+2( Extermal dependence US industry j. Law and order country k) +Bmns (Intangible assets/Fix ed assets US industry j. Property rights country k) The next two sets of tests focus on firm's actual choices of investment and financing patterns, providing the supporting evidence that investment and financing structures can both be affected by the quality of the legal framework in a country. The first set of tests relate the investment structure of firm j in county k to the quality of k. Eq (2) specifically tests whether firms in countries with better protection of property have relatively less amounts of fixed assets and larger10 manufacturing to control for differences in growth potential across industries. Industries with large market shares initially may have less growth potential than industries with small market shares initially. . (Intangible assets/Fix ed assets US industry Property rights country ) (External dependence US industry Financial developmen t country ) (Industry share of manufactur ing in country in 1980) Growth Constant Country indicators Industry indicators , 3 2 1 , 1... 1... j k m n m n m n j k m m m n j k j k j k e b b b b b + + × × + × × + × = + × + × + + + + + + + + (1a) The law and finance literature asserts that financial markets are more developed in environments with better law and order (and creditor rights). In this view, financial development is the result of a good legal framework and the supply of external financing is not independent of the quality of the legal framework. We therefore also estimate a variation on the previous specification that uses the law and order index of a country rather than its financial development to measure the link between a sector’s financial dependence and growth (equation 1b).4 . (Intangible assets/Fix ed assets US industry Property rights country ) (External dependence US industry Law and order country ) (Industry 'sshare of manufactur ing in country in 1980) Growth Constant Country indicators Industry indicators , 3 2 1 , 1... 1... j k m n m n m n j k m m m n j k j k j k e b b b b b + + × × + × × + × = + × + × + + + + + + + + (1b) The next two sets of tests focus on firm’s actual choices of investment and financing patterns, providing the supporting evidence that investment and financing structures can both be affected by the quality of the legal framework in a country. The first set of tests relate the investment structure of firm j in county k to the quality of property rights in country k. Equation (2) specifically tests whether firms in countries with better protection of property have relatively less amounts of fixed assets and larger