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Human Capital, Rent Seeking, and a Transition from Stagnation to Growth

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Author Info
Lagerlöf, Nils-Petter () (York University)
Tangerås, Thomas () (The Research Institute of Industrial Economics)

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Abstract

We present a growth model where agents divide time between rent seeking in the form of resource competition; and working in a human capital sector, interpreted as trade or manufacturing. Rent seeking exerts negative externalities on the productivity of human capital, generating multiple steady states. Adding shocks to the model -- in the form of violence in the rent seeking process, and changes in the size of the contested resource base -- the model can replicate a long phase with stagnant incomes and high levels of rent seeking, interrupted by small failed growth spurts; this is eventually followed by a permanent transition to a sustained growth path where rent seeking vanishes in the limit. We illustrate the workings of the model with simulations and argue that the results, and what drives them, fit with some broad historical facts about growth, rent seeking, and the so-called natural resource curse.

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Publisher Info
Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 656.

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Length: 38 pages
Date of creation: 19 Oct 2005
Date of revision:
Handle: RePEc:hhs:iuiwop:0656

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Related research
Keywords: Conflict; Long-Run Growth; Rent Seeking;

Other versions of this item:

Find related papers by JEL classification:
D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
N10 - Economic History - - Macroeconomics and Monetary Economics; Growth and Fluctuations - - - General, International, or Comparative
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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