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Effects Of Rent-Seeking On Economic Growth In Low-Income Economies

Author

Listed:
  • Zi Wen Vivien Wong

    (Universiti Tunku Abdul Rahmana)

  • Fanyu Chen

    (Universiti Tunku Abdul Rahmana)

  • Thian Hee Yiew

    (Universiti Tunku Abdul Rahmana)

Abstract

Sluggish growth in low-income countries, despite the high performance in other economic indicators, motivates the literature to switch attention to institutions. Despite its crucial economic implications, there is limited attention on rent-seeking as a driver of economic growth in low-income countries. This paper investigates the effect of rent-seeking on growth in low-income countries from 2004 to 2017using the system generalized method of moments estimator. The empirical results reveal that rent-seeking negatively affects growth, implying that it obstructs the pace of economic development in low-income countries. Hence, it is necessary for policymakers in these countries to adopt anti-rent-seeking policies to promote a rapid and sustainable growth.

Suggested Citation

  • Zi Wen Vivien Wong & Fanyu Chen & Thian Hee Yiew, 2021. "Effects Of Rent-Seeking On Economic Growth In Low-Income Economies," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 24(2), pages 205-220, June.
    • Handle: RePEc:idn:journl:v:24:y:2021:i:2c:p:205-220
    DOI: https://doi.org/10.21098/bemp.v24i2.1386
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    Keywords

    Rent-seeking; Economic growth; System generalized method of moments estimator; Low-income countries;
    All these keywords.

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy

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