The political economy of investment: Sclerotic effects from interest groups
AbstractWe investigate the relationship between interest group activity and investment by analyzing an unbalanced panel of observations on 126 countries over three time periods. We find that the number of interest groups in a nation is negatively related to investment, consistent with a sclerotic effect due to rent-seeking by interest groups. Our findings are robust to the inclusion of a variety of additional common controls in the specification, to potential outlying observations, and to varied sample-selection procedures. We do find, however, that the sclerotic impact of groups on investment is stronger across developed OECD countries than for the developing non-OECD countries. Effects also tend to be stronger in democratic nations, but are dependent upon how strict a definition of democracy is used.
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Bibliographic InfoArticle provided by Elsevier in its journal European Journal of Political Economy.
Volume (Year): 26 (2010)
Issue (Month): 2 (June)
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Investment Institutional sclerosis Interest groups Sample-selection bias;
Other versions of this item:
- Bonnie Wilson & Jac Heckelman, 2010. "The Political Economy of Investment: Sclerotic Effects from Interest Groups," Working Papers 2012-03, Saint Louis University, Department of Economics.
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