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Rent Seeking and Democracy in Latin America: What Drives What?

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Author Info
César Calderón
Alberto Chong ()

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Abstract

Drawing on previously unused objective institutional data, we provide evidence for the causal link between rent-seeking behavior and democracy in Uruguay, a country where both rent-seeking behavior and political shifts have varied widely in the last 80 years, but where ethnolinguistic heterogeneity and income inequality have remained historically low. The latter helps better identify some “pure” political interactions and how they are linked with rent-seeking outcomes. We find that the presence and duration of democratic regimes appear to have been conducive to a decrease in rent-seeking actions in Uruguay, although the reduction in rent seeking does not appear to have had a bearing on the quality of democratic regime in the country. While the duration of democratic regime may impact rent-seeking behavior, rent seeking also displays a causal link to democratic duration.

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Paper provided by Inter-American Development Bank, Research Department in its series RES Working Papers with number 4435.

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Date of creation: Jan 2006
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Handle: RePEc:idb:wpaper:4435

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  1. Alberto Chong & Luisa Zanforlin, 2001. "Inward-Looking Policies, Institutions, Autocrats, and Economic Growth in Latin America: An Empirical Exploration," RES Working Papers 4255, Inter-American Development Bank, Research Department. [Downloadable!]
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  2. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August. [Downloadable!] (restricted)
  3. Greif, Avner, 1994. "On the Political Foundations of the Late Medieval Commercial Revolution: Genoa During the Twelfth and Thirteenth Centuries," The Journal of Economic History, Cambridge University Press, vol. 54(02), pages 271-287, June. [Downloadable!]
  4. César Calderón & Alberto Chong, 2006. "Do Democracies Breed Rent-seeking Behavior?," Journal of Policy Reform, Taylor and Francis Journals, vol. 9(4), pages 247-260, December. [Downloadable!] (restricted)
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  5. Taylor, Alan M., 1998. "On the Costs of Inward-Looking Development: Price Distortions, Growth, and Divergence in Latin America," The Journal of Economic History, Cambridge University Press, vol. 58(01), pages 1-28, March. [Downloadable!]
  6. Marianne Bertrand & Sendhil Mullainathan, 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. [Downloadable!] (restricted)
  7. Wittman, Donald, 1989. "Why Democracies Produce Efficient Results," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1395-1424, December. [Downloadable!] (restricted)
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