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Destructive Competition: Factionalism and Rent-Seeking in Iran

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  • Bjorvatn, Kjetil
  • Selvik, Kjetil

Abstract

Summary The literature on the "resource curse" suggests that the quality of institutions determines a country's ability to transform resource wealth into economic development. This article explores the link between resource rents, institutions, and economic performance by focusing on the case of Iran. A key feature of Iran's institutional environment is its factionalized political system. We give an introduction to the main actors vying for control over the country's resources and analyze the effect of their destructive competition. Using a theoretical model, we study how oil revenues and the relative strength of interest groups affect private investment and economic efficiency.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 36 (2008)
Issue (Month): 11 (November)
Pages: 2314-2324

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Handle: RePEc:eee:wdevel:v:36:y:2008:i:11:p:2314-2324

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

Related research

Keywords: Iran rent-seeking oil revenues institutions factionalism resource curse Middle East;

References

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  1. Asim Ijaz Khwaja & Atif Mian, 2005. "Do Lenders Favor Politically Connected Firms? Rent Provision in an Emerging Financial Market," The Quarterly Journal of Economics, MIT Press, vol. 120(4), pages 1371-1411, November.
  2. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2002. "Institutions and the resource curse," GE, Growth, Math methods 0210004, EconWPA.
  3. Xavier Sala-i-Martin & Arvind Subramanian, 2013. "Addressing the Natural Resource Curse: An Illustration from Nigeria," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 22(4), pages 570-615, August.
  4. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2006. "Cursed by Resources or Institutions?," The World Economy, Wiley Blackwell, vol. 29(8), pages 1117-1131, 08.
  5. Nitzan, Shmuel, 1994. "Modelling rent-seeking contests," European Journal of Political Economy, Elsevier, vol. 10(1), pages 41-60, May.
  6. Baland, Jean-Marie & Francois, Patrick, 2000. "Rent-seeking and resource booms," Journal of Development Economics, Elsevier, vol. 61(2), pages 527-542, April.
  7. Bulte, Erwin H. & Damania, Richard & Deacon, Robert T., 2005. "Resource intensity, institutions, and development," World Development, Elsevier, vol. 33(7), pages 1029-1044, July.
  8. Sachs, Jeffrey D. & Warner, Andrew M., 2001. "The curse of natural resources," European Economic Review, Elsevier, vol. 45(4-6), pages 827-838, May.
  9. Philip R. Lane & Aaron Tornell, 1999. "The Voracity Effect," American Economic Review, American Economic Association, vol. 89(1), pages 22-46, March.
  10. Roland Hodler, 2004. "The Curse of Natural Resources in Fractionalized Countries," Diskussionsschriften dp0404, Universitaet Bern, Departement Volkswirtschaft.
  11. Kohli, Inderjit & Singh, Nirvikar, 1999. " Rent Seeking and Rent Setting with Asymmetric Effectiveness of Lobbying," Public Choice, Springer, vol. 99(3-4), pages 275-98, June.
  12. Arvind Subramanian & Xavier Sala-i-Martin, 2003. "Addressing the Natural Resource Curse," IMF Working Papers 03/139, International Monetary Fund.
  13. Torvik, Ragnar, 2002. "Natural resources, rent seeking and welfare," Journal of Development Economics, Elsevier, vol. 67(2), pages 455-470, April.
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Cited by:
  1. Mohammad Reza Farzanegan & Mohammad Habibpour, 2014. "Direct Distribution of Rents and the Resource Curse in Iran: A Micro-econometric Analysis," MAGKS Papers on Economics 201425, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  2. Mohammad Reza Farzanegan & Mohammad Habibpour, 2014. "Direct Distribution of Rents and the Resource Curse in Iran: A Micro-econometric Analysis," CESifo Working Paper Series 4824, CESifo Group Munich.
  3. Christian Dreger & Teymur Rahmani, 2014. "The Impact of Oil Revenues on the Iranian Economy and the Gulf States," Discussion Papers of DIW Berlin 1369, DIW Berlin, German Institute for Economic Research.
  4. Bjorvatn, Kjetil & Farzanegan, Mohammad Reza & Schneider, Friedrich, 2012. "Resource Curse and Power Balance: Evidence from Oil-Rich Countries," World Development, Elsevier, vol. 40(7), pages 1308-1316.
  5. Mohammad Reza Farzanegan, 2014. "Can Oil-Rich Countries Encourage Entrepreneurship? ‘Yes’, ‘No’ but not ‘Perhaps’," MAGKS Papers on Economics 201406, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  6. Mohammad Reza Farzanegan, 2012. "Resource Wealth and Entrepreneurship: A Blessing or a Curse?," MAGKS Papers on Economics 201224, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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