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Rent-seeking bureaucracies, inequality, and growth

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  • Spinesi, Luca

Abstract

This paper develops a Schumpeterian growth model in which institutional quality matters for inequality and growth. In particular, asymmetric information between political authorities and rent-seeking bureaucratic agencies diverts resources from innovative activities - crucial for development to take off in middle and low income countries - and unnecessarily exacerbates income inequality. The theoretical predictions not only match empirical facts on inequality, institutional quality and growth well documented in the literature, but are easily assessed in two groups of Latin American and African countries, as shown in the final calibration analysis.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 90 (2009)
Issue (Month): 2 (November)
Pages: 244-257

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Handle: RePEc:eee:deveco:v:90:y:2009:i:2:p:244-257

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Web page: http://www.elsevier.com/locate/devec

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Keywords: Innovation Inequality and growth Asymmetric information Rent-seeking bureaucracies;

References

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Cited by:
  1. Iqbal, Nasir & Daly, Vince, 2014. "Rent seeking opportunities and economic growth in transitional economies," Economic Modelling, Elsevier, vol. 37(C), pages 16-22.

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