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Do Democracies Breed Rent-seeking Behavior?

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Author Info

  • Cesar Calderon
  • Alberto Chong

Abstract

Using objective institutional historical data for the case of Uruguay, we test the link between rent-seeking behavior in democracies using time-series and panel data approaches. We find three main results. First, democratic regimes are negatively linked with rent-seeking actions. Second, the longer the duration of democracy, the less rent seeking in a society. Third, legislation enacted more transparently is negatively correlated with rent-seeking behavior. Our results are robust to the use of different econometric methods and basic robustness tests and are consistent with prevailing theory.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/13841280601079209
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Journal of Economic Policy Reform.

Volume (Year): 9 (2006)
Issue (Month): 4 ()
Pages: 247-260

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Handle: RePEc:taf:jpolrf:v:9:y:2006:i:4:p:247-260

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Related research

Keywords: Rent-seeking; corruption; democracy; transparency; governance;

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References

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  1. Martín Rama, 1994. "Endogenous Trade Policy: A Time-Series Approach," Economics and Politics, Wiley Blackwell, vol. 6(3), pages 215-232, November.
  2. A. Chong & C. Calderón, 2000. "Causality and Feedback Between Institutional Measures and Economic Growth," Economics and Politics, Wiley Blackwell, vol. 12(1), pages 69-81, 03.
  3. Knack, Stephen & Keefer, Philip, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1251-88, November.
  4. Baldwin, Robert E, 1989. "The Political Economy of Trade Policy," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 119-35, Fall.
  5. Keefer, Philip, 2004. "Elections, special interests, and the fiscal costs of financial crisis," Policy Research Working Paper Series 3439, The World Bank.
  6. Alberto Chong & Luisa Zanforlin, 2004. "Inward-Looking Policies, Institutions, Autocrats, and Economic Growth in Latin America: An Empirical Exploration," Public Choice, Springer, vol. 121(3), pages 335-361, December.
  7. Rama, Martin, 1993. "Rent seeking and economic growth : A theoretical model and some empirical evidence," Journal of Development Economics, Elsevier, vol. 42(1), pages 35-50, October.
  8. W. J. Henisz, 2000. "The Institutional Environment for Economic Growth," Economics and Politics, Wiley Blackwell, vol. 12(1), pages 1-31, 03.
  9. Takacs, Wendy E, 1981. "Pressures for Protectionism: An Empirical Analysis," Economic Inquiry, Western Economic Association International, vol. 19(4), pages 687-93, October.
  10. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
  11. Sendhil Mullainathan & Marianne Bertrand, 2001. "Do People Mean What They Say? Implications for Subjective Survey Data," American Economic Review, American Economic Association, vol. 91(2), pages 67-72, May.
  12. Alesina, A. & Drazen, A., 1991. "Why Are Stabilizations Delayed?," Papers 6-91, Tel Aviv - the Sackler Institute of Economic Studies.
  13. Raymond Fisman, 2001. "Estimating the Value of Political Connections," American Economic Review, American Economic Association, vol. 91(4), pages 1095-1102, September.
  14. Wittman, Donald, 1989. "Why Democracies Produce Efficient Results," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1395-1424, December.
  15. Alberto Chong & Luisa Zanforlin, 2001. "Inward-Looking Policies, Institutions, Autocrats, and Economic Growth in Latin America: An Empirical Exploration," Research Department Publications 4255, Inter-American Development Bank, Research Department.
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Citations

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Cited by:
  1. César Calderón & Alberto Chong, 2006. "Rent Seeking and Democracy in Latin America: What Drives What?," Research Department Publications 4435, Inter-American Development Bank, Research Department.
  2. César Calderón & Alberto Chong, 2006. "Búsqueda de rentas y democracia en América Latina: ¿Qué impulsa a qué?," Research Department Publications 4436, Inter-American Development Bank, Research Department.
  3. Marco Pani, 2009. "Hold Your Nose and Vote," IMF Working Papers 09/83, International Monetary Fund.
  4. Hélène Ehrhart, 2011. "Assessing the relationship between democracy and domestic taxes in developing countries," Working Papers halshs-00553607, HAL.
  5. Marco Pani, 2011. "Hold your nose and vote: corruption and public decisions in a representative democracy," Public Choice, Springer, vol. 148(1), pages 163-196, July.

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