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Parasites

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Author Info
Halvor Mehlum (University of Oslo)
Kalle Moene (University of Oslo)
Ragnar Torvik (University of Trondheim)

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Abstract

Unproductive enterprises that feed on productive businesses, are rampant in developing countries. A consequence of parasitic enterprises is that societies may be locked into a self enforcing configuration of beliefs and practices that result in persistent poverty. When entrepreneurs of both productive and parasitic enterprises are drawn from the same limited pool of entrepreneurs, the rise of parasitic profit opportunities may cause economic stagnation and underdevelopment that in turn enhance the profitability of parasitic enterprises relative to productive enterprises. Thus parasitic rent appropriation may induce stagnation, while stagnation may induce parasitic activities. Together the two links can lead developing economies into a poverty trap.

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File URL: http://129.3.20.41/eps/dev/papers/0406/0406003.pdf
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Publisher Info
Paper provided by EconWPA in its series Development and Comp Systems with number 0406003.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 20 pages
Date of creation: 05 Jun 2004
Date of revision:
Handle: RePEc:wpa:wuwpdc:0406003

Note: Type of Document - pdf; pages: 20
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Web page: http://129.3.20.41

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Related research
Keywords: Parasitic activities; rent seeking; strategig complimentarities;

Find related papers by JEL classification:
O - Economic Development, Technological Change, and Growth
P - Economic Systems

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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  1. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June. [Downloadable!] (restricted)
  2. Acemoglu, Daron, 1995. "Reward structures and the allocation of talent," European Economic Review, Elsevier, vol. 39(1), pages 17-33, January. [Downloadable!] (restricted)
    Other versions:
  3. Bigsten, Arne & Moene, Karl Ove, 1996. "Growth and Rent Dissipation: The Case of Kenya," Journal of African Economies, Oxford University Press, vol. 5(2), pages 177-98, June.
  4. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2002. "Plunder & Protection Inc," Development and Comp Systems 0210002, EconWPA. [Downloadable!]
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  5. Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1993. "Why Is Rent-Seeking So Costly to Growth?," American Economic Review, American Economic Association, vol. 83(2), pages 409-14, May. [Downloadable!] (restricted)
  6. Craig Burnside & David Dollar, 2000. "Aid, Policies, and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 847-868, September. [Downloadable!] (restricted)
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  7. Baland, Jean-Marie & Francois, Patrick, 2000. "Rent-seeking and resource booms," Journal of Development Economics, Elsevier, vol. 61(2), pages 527-542, April. [Downloadable!] (restricted)
  8. Mehlum, Halvor & Moene, Karl & Torvik, Ragnar, 2003. "Predator or prey?: Parasitic enterprises in economic development," European Economic Review, Elsevier, vol. 47(2), pages 275-294, April. [Downloadable!] (restricted)
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  9. Mehlum, Halvor & Moene, Karl-Ove & Torvik, Ragnar, 2003. "Institutions and the resource curse," Memorandum 29/2002, Oslo University, Department of Economics. [Downloadable!]
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  10. Baumol, William J, 1990. "Entrepreneurship: Productive, Unproductive, and Destructive," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 893-921, October. [Downloadable!] (restricted)
  11. Lucas, Robert E, Jr, 1990. "Why Doesn't Capital Flow from Rich to Poor Countries?," American Economic Review, American Economic Association, vol. 80(2), pages 92-96, May. [Downloadable!] (restricted)
  12. Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1991. "The Allocation of Talent: Implications for Growth," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 503-30, May. [Downloadable!] (restricted)
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  13. Herschel I. Grossman, 1998. "Producers and Predators," Working Papers 98-6, Brown University, Department of Economics.
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  14. Konrad, Kai A & Skaperdas, Stergios, 1998. "Extortion," Economica, London School of Economics and Political Science, vol. 65(260), pages 461-77, November. [Downloadable!] (restricted)
  15. Usher, D, 1987. "Theft as a Paradigm for Departures from Efficiency," Oxford Economic Papers, Oxford University Press, vol. 39(2), pages 235-52, June. [Downloadable!] (restricted)
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