IDEAS home Printed from https://ideas.repec.org/p/slu/wpaper/2007-01.html
   My bibliography  Save this paper

Special-Interest Groups and Growth

Author

Listed:
  • Bonnie Wilson

    (Department of Economics, Saint Louis University)

  • Dennis Coates

    (Department of Economics, University of Maryland Baltimore County)

  • Jac Heckelman

    (Department of Economics, Wake Forest University)

Abstract

This paper explores the relationship between special-interest groups and economic growth, using newly assembled data on the number of groups observed across countries. In a sample of 86 countries at two points in time (for a total of 169 observations), we ¯nd support for Mancur Olson's theory that interest group activity reduces economic growth. We also ¯nd evidence that interest groups are negatively associated with both channels to growth - capital stock growth and productivity growth.

Suggested Citation

  • Bonnie Wilson & Dennis Coates & Jac Heckelman, "undated". "Special-Interest Groups and Growth," Working Papers 2007-01, Saint Louis University, Department of Economics.
    • Handle: RePEc:slu:wpaper:2007-01
    as

    Download full text from publisher

    File URL: http://www.slu-econ-wp.com/RePEc/slu/bonnie_wilson/growth.pdf
    File Function: Revised version, 2010
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 222-279, April.
    2. Kishore Gawande & Usree Bandyopadhyay, 2000. "Is Protection for Sale? Evidence on the Grossman-Helpman Theory of Endogenous Protection," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 139-152, February.
    3. Ramey, Garey & Ramey, Valerie A, 1995. "Cross-Country Evidence on the Link between Volatility and Growth," American Economic Review, American Economic Association, vol. 85(5), pages 1138-1151, December.
    4. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 83-116.
    5. Dennis Coates & Bonnie Wilson, 2007. "Interest group activity and long-run stock market performance," Public Choice, Springer, vol. 133(3), pages 343-358, December.
    6. F. Cribari-Neto & S. G. Zarkos, 1999. "Bootstrap methods for heteroskedastic regression models: evidence on estimation and testing," Econometric Reviews, Taylor & Francis Journals, vol. 18(2), pages 211-228.
    7. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    8. Stephen Knack & Philip Keefer, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1251-1288.
    9. Randall S. Kroszner & Philip E. Strahan, 1999. "What Drives Deregulation? Economics and Politics of the Relaxation of Bank Branching Restrictions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(4), pages 1437-1467.
    10. La Porta, Rafael & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1997. "Legal Determinants of External Finance," Journal of Finance, American Finance Association, vol. 52(3), pages 1131-1150, July.
    11. Raghuram G. Rajan & Luigi Zingales, 2000. "The Great Reversals: The Politics of Financial Development in the 20th Century," OECD Economics Department Working Papers 265, OECD Publishing.
    12. Coates, Dennis & Heckelman, Jac C. & Wilson, Bonnie, 2010. "The political economy of investment: Sclerotic effects from interest groups," European Journal of Political Economy, Elsevier, vol. 26(2), pages 208-221, June.
    13. Knack, Stephen, 2003. "Groups, Growth and Trust: Cross-Country Evidence on the Olson and Putnam Hypotheses," Public Choice, Springer, vol. 117(3-4), pages 341-355, December.
    14. Dennis Coates & Jac Heckelman & Bonnie Wilson, 2007. "Determinants of interest group formation," Public Choice, Springer, vol. 133(3), pages 377-391, December.
    15. Rajan, Raghuram G. & Zingales, Luigi, 2003. "The great reversals: the politics of financial development in the twentieth century," Journal of Financial Economics, Elsevier, vol. 69(1), pages 5-50, July.
    16. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    17. Jac C. Heckelman, 2007. "Explaining the Rain: The Rise and Decline of Nations after 25 Years," Southern Economic Journal, John Wiley & Sons, vol. 74(1), pages 18-33, July.
    18. Bonnie Wilson & Jac Heckelman & Dennis Coates, 2007. "Special-Interest Groups and Volatility," Economics Bulletin, AccessEcon, vol. 15(18), pages 1-13.
    19. Asli Demeirgüç-Kunt & Ross Levine (ed.), 0. "Finance and Growth," Books, Edward Elgar Publishing, number 17119.
    20. Daniel Horgos & Klaus Zimmermann, 2009. "Interest groups and economic performance: some new evidence," Public Choice, Springer, vol. 138(3), pages 301-315, March.
    21. MacKinnon, James G. & White, Halbert, 1985. "Some heteroskedasticity-consistent covariance matrix estimators with improved finite sample properties," Journal of Econometrics, Elsevier, vol. 29(3), pages 305-325, September.
    22. Coates, Dennis & Heckelman, Jac C, 2003. "Interest Groups and Investment: A Further Test of the Olson Hypothesis," Public Choice, Springer, vol. 117(3-4), pages 333-340, December.
    23. Thorsten Beck & Asli Demirguc-Kunt & Ross Levine, 2005. "SMEs, Growth, and Poverty: Cross-Country Evidence," Journal of Economic Growth, Springer, vol. 10(3), pages 199-229, September.
    24. Heckelman, Jac C, 2000. "Consistent Estimates of the Impact of Special Interest Groups on Economic Growth," Public Choice, Springer, vol. 104(3-4), pages 319-327, September.
    25. Ahmed Mushfiq Mobarak, 2005. "Democracy, Volatility, and Economic Development," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 348-361, May.
    26. Li, Wei & Xu, Lixin Colin, 2002. "The Political Economy of Privatization and Competition: Cross-Country Evidence from the Telecommunications Sector," Journal of Comparative Economics, Elsevier, vol. 30(3), pages 439-462, September.
    27. Giovanni Maggi & Pinelopi Koujianou Goldberg, 1999. "Protection for Sale: An Empirical Investigation," American Economic Review, American Economic Association, vol. 89(5), pages 1135-1155, December.
    28. Pritchett, Lant, 2000. "Understanding Patterns of Economic Growth: Searching for Hills among Plateaus, Mountains, and Plains," The World Bank Economic Review, World Bank, vol. 14(2), pages 221-250, May.
    29. Bonnie Wilson & Dennis Coates & Jac Heckelman, 2008. "Democracy and Volatility: Do Special-Interest Groups Matter?," Working Papers 2008-01, Saint Louis University, Department of Economics, revised Aug 2009.
    30. Doner Richard F. & Schneider Ben Ross, 2000. "Business Associations and Economic Development: Why Some Associations Contribute More Than Others," Business and Politics, De Gruyter, vol. 2(3), pages 1-29, December.
    31. Dennis Mueller & Peter Murrell, 1986. "Interest groups and the size of government," Public Choice, Springer, vol. 48(2), pages 125-145, January.
    32. Kennelly, Brendan & Murrell, Peter, 1991. "Industry Characteristics and Interest Group Formation: An Empirical Study," Public Choice, Springer, vol. 70(1), pages 21-40, April.
    33. Thorsten Beck & Asli Demirgüç-Kunt, 2004. "SMEs, Growth, and Poverty," World Bank Publications - Reports 11278, The World Bank Group.
    34. Bischoff, Ivo, 2003. "Determinants of the Increase in the Number of Interest Groups in Western Democracies: Theoretical Considerations and Evidence from 21 OECD Countries," Public Choice, Springer, vol. 114(1-2), pages 197-218, January.
    35. Jayachandran, Seema, 2006. "The Jeffords Effect," Journal of Law and Economics, University of Chicago Press, vol. 49(2), pages 397-425, October.
    36. Beck, Thorsten & Levine, Ross & Loayza, Norman, 2000. "Finance and the sources of growth," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 261-300.
    37. Crain, W Mark & Lee, Katherine J, 1999. "Economic Growth Regressions for the American States: A Sensitivity Analysis," Economic Inquiry, Western Economic Association International, vol. 37(2), pages 242-257, April.
    38. Doner, Richard F. & Schneider, Ben Ross, 2000. "Business Associations and Economic Development: Why Some Associations Contribute More Than Others," Business and Politics, Cambridge University Press, vol. 2(3), pages 261-288, November.
    39. Peter Murrell, 1984. "An examination of the factors affecting the formation of interest groups in OECD countries," Public Choice, Springer, vol. 43(2), pages 151-171, January.
    40. Raymond Fisman, 2001. "Estimating the Value of Political Connections," American Economic Review, American Economic Association, vol. 91(4), pages 1095-1102, September.
    41. repec:ebl:ecbull:v:15:y:2007:i:18:p:1-13 is not listed on IDEAS
    42. Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(3), pages 371-400.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Eiji Yamamura & Haruo Kondoh, 2013. "Government Transparency And Expenditure In The Rent-Seeking Industry: The Case Of Japan For 1998–2004," Contemporary Economic Policy, Western Economic Association International, vol. 31(3), pages 635-647, July.
    2. Ibrahim D. Raheem & Kazeem B. Ajide & Xuan V. Vo, 2021. "The hype of social capital in the finance‐growth nexus," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 50(3), November.
    3. Papadimitri, Panagiota & Pasiouras, Fotios & Pescetto, Gioia & Wohlschlegel, Ansgar, 2021. "Does political influence distort banking regulation? Evidence from the US," Journal of Financial Stability, Elsevier, vol. 53(C).
    4. Theresa Hager, 2020. "Special Interest Groups and Growth: A Meta-Analysis of Mancur Olsons Theory," ICAE Working Papers 116, Johannes Kepler University, Institute for Comprehensive Analysis of the Economy.
    5. Ismail M. Cole, 2015. "Interest group activity and economic growth: some new evidence from the US states," Applied Economics Letters, Taylor & Francis Journals, vol. 22(10), pages 825-829, July.
    6. Jac C. Heckelman & Bonnie Wilson, 2013. "Institutions, Lobbying, and Economic Performance," Economics and Politics, Wiley Blackwell, vol. 25(3), pages 360-386, November.
    7. Dodge Cahan & Niklas Potrafke, 2021. "The Democrat-Republican presidential growth gap and the partisan balance of the state governments," Public Choice, Springer, vol. 189(3), pages 577-601, December.
    8. Jac C. Heckelman & Bonnie Wilson, 2014. "Interest Groups and the “Rise and Decline” of Growth," Southern Economic Journal, John Wiley & Sons, vol. 81(2), pages 435-456, October.
    9. William Pyle & Laura Solanko, 2013. "The composition and interests of Russia’s business lobbies: testing Olson’s hypothesis of the “encompassing organization”," Public Choice, Springer, vol. 155(1), pages 19-41, April.
    10. Robert F. Salvino & Gregory M. Randolph & Geoffrey K. Turnbull & Michael T. Tasto, 2019. "The effects of decentralization on special interest groups," Public Choice, Springer, vol. 181(3), pages 191-213, December.
    11. Justin Conrad & Hong-Cheol Kim & Mark Souva, 2013. "Narrow interests and military resource allocation in autocratic regimes," Journal of Peace Research, Peace Research Institute Oslo, vol. 50(6), pages 737-750, November.
    12. Neyapti, Bilin, 2013. "Modeling institutional evolution," Economic Systems, Elsevier, vol. 37(1), pages 1-16.
    13. Domenico Rossignoli, 2015. "Too many and too much? Special-interest groups and inequality at the turn of the century," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 130(3), pages 337-366.
    14. Taner Güney, 2015. "Environmental sustainability and pressure groups," Quality & Quantity: International Journal of Methodology, Springer, vol. 49(6), pages 2331-2344, November.
    15. Coates, Dennis & Heckelman, Jac C. & Wilson, Bonnie, 2010. "The political economy of investment: Sclerotic effects from interest groups," European Journal of Political Economy, Elsevier, vol. 26(2), pages 208-221, June.
    16. Martin Baur, 2010. "Politics and Income Distribution," Chapters, in: Neri Salvadori (ed.), Institutional and Social Dynamics of Growth and Distribution, chapter 3, Edward Elgar Publishing.
    17. Michele Hoyman & Jamie McCall & Laurie Paarlberg & John Brennan, 2016. "Considering the Role of Social Capital for Economic Development Outcomes in U.S. Counties," Economic Development Quarterly, , vol. 30(4), pages 342-357, November.
    18. Cole, Ismail M., 2014. "Short- and long-term growth effects of special interest groups in the U.S. states: A dynamic panel error-correction approach," MPRA Paper 54455, University Library of Munich, Germany, revised 02 Mar 2014.
    19. Pittaluga, Giovanni B. & Reghezza, Alessio & Seghezza, Elena, 2020. "Reconsidering the modernization hypothesis: The role of diversified production and interest‐group competition," European Journal of Political Economy, Elsevier, vol. 65(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jac C. Heckelman & Bonnie Wilson, 2014. "Interest Groups and the “Rise and Decline” of Growth," Southern Economic Journal, John Wiley & Sons, vol. 81(2), pages 435-456, October.
    2. Domenico Rossignoli, 2015. "Too many and too much? Special-interest groups and inequality at the turn of the century," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 130(3), pages 337-366.
    3. Djankov, Simeon & Glaeser, Edward & La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2003. "The new comparative economics," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 595-619, December.
    4. Jac C. Heckelman & Bonnie Wilson, 2013. "Institutions, Lobbying, and Economic Performance," Economics and Politics, Wiley Blackwell, vol. 25(3), pages 360-386, November.
    5. Coates, Dennis & Heckelman, Jac C. & Wilson, Bonnie, 2010. "The political economy of investment: Sclerotic effects from interest groups," European Journal of Political Economy, Elsevier, vol. 26(2), pages 208-221, June.
    6. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 2003. "Law, endowments, and finance," Journal of Financial Economics, Elsevier, vol. 70(2), pages 137-181, November.
    7. Martin Strieborny & Madina Kukenova, 2016. "Investment in Relationship-Specific Assets: Does Finance Matter?," Review of Finance, European Finance Association, vol. 20(4), pages 1487-1515.
    8. Una Okonkwo Osili & Anna L. Paulson, 2004. "Institutional quality and financial market development: evidence from international migrants in the U.S," Working Paper Series WP-04-19, Federal Reserve Bank of Chicago.
    9. Thorsten Beck & Ross Levine, 2008. "Legal Institutions and Financial Development," Springer Books, in: Claude Ménard & Mary M. Shirley (ed.), Handbook of New Institutional Economics, chapter 11, pages 251-278, Springer.
    10. Fogel, Kathy & Morck, Randall & Yeung, Bernard, 2008. "Big business stability and economic growth: Is what's good for General Motors good for America?," Journal of Financial Economics, Elsevier, vol. 89(1), pages 83-108, July.
    11. William Pyle & Laura Solanko, 2013. "The composition and interests of Russia’s business lobbies: testing Olson’s hypothesis of the “encompassing organization”," Public Choice, Springer, vol. 155(1), pages 19-41, April.
    12. Beck, T.H.L., 2010. "Legal Institutions and Economic Development," Other publications TiSEM 8aa07b48-ce55-4cf6-8754-7, Tilburg University, School of Economics and Management.
    13. Feijen, Erik, 2005. "Do incumbents manipulate access to finance during banking crises?," Policy Research Working Paper Series 3660, The World Bank.
    14. Alvaro Aguirre, 2017. "Contracting Institutions and Economic Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 24, pages 192-217, March.
    15. He, Kathy S. & Morck, Randall & Yeung, Bernard, 2003. "Corporate Stability and Economic Growth," CEI Working Paper Series 2003-12, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    16. Sam Hak Kan Tang & Nicolaas Groenewold & Charles Ka Yui Leung, 2003. "Institutions, Technical Change and Macroeconomic Volatility, Crises and Growth: A Robust Causation," Economics Discussion / Working Papers 03-21, The University of Western Australia, Department of Economics.
    17. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 2003. "Law and finance: why does legal origin matter?," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 653-675, December.
    18. Cole, Ismail M., 2014. "Short- and long-term growth effects of special interest groups in the U.S. states: A dynamic panel error-correction approach," MPRA Paper 54455, University Library of Munich, Germany, revised 02 Mar 2014.
    19. Jac C. Heckelman, 2007. "Explaining the Rain: The Rise and Decline of Nations after 25 Years," Southern Economic Journal, John Wiley & Sons, vol. 74(1), pages 18-33, July.
    20. Claessens, Stijn & Yurtoglu, B. Burcin, 2013. "Corporate governance in emerging markets: A survey," Emerging Markets Review, Elsevier, vol. 15(C), pages 1-33.

    More about this item

    Keywords

    growth; institutional sclerosis; special-interest groups;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • D7 - Microeconomics - - Analysis of Collective Decision-Making

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:slu:wpaper:2007-01. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bonnie Wilson (email available below). General contact details of provider: https://edirc.repec.org/data/desluus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.