Urs Steiner Brandt () (Department of Environmental and Business Economics, University of Southern Denmark) Gert Tinggaard Svendsen () (Department of Political Science, University of Aarhus)
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Our theoretical model suggests that ‘bureaucratisation’ is a potential threat to future economic growth in the EU. The bureaucratic incentives to budget maximize leads to overwhelming pressure for new administrative tasks because bureaucracies are competing for resources just like fishermen or hunters. EU bureaucracies will, given economical rational self-interest, try to reap more than what is efficient at the EU level and consequently raise the general taxation level in the EU. This idea seems to be confirmed by the overall development in the EU, which has had a total staff increase of more than 300 percent in thirty years. For ex-ample, in the specific case of the largest budget expense, namely the Common Agricultural Policy that consumes roughly half of the total budget, all attempts to reform only led to a whole range of new tasks resulting in more administra-tive staff and higher budgets. Bureaucratic rent-seeking is arguably possible at the EU level due to the strong institutional position of the Commission, which runs the budget, and the weak institutional position of the EU Parliament, which does not have the strength nor the information to critically review, approve and co-ordinate the total EU budget. Therefore, the uncoordinated activities of EU bureaucracies threaten to reduce the stock of production factors below the efficient amount, thereby low-ering future economic growth rates.
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Paper provided by University of Southern Denmark, Department of Environmental and Business Economics in its series Working Papers with number
46/03.
Find related papers by JEL classification: H2 - Public Economics - - Taxation, Subsidies, and Revenue H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents P1 - Economic Systems - - Capitalist Systems P2 - Economic Systems - - Socialist Systems and Transition Economies Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
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