IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article

Rent seeking opportunities and economic growth in transitional economies

  • Iqbal, Nasir
  • Daly, Vince

This study empirically explores the growth effects of rent seeking activity (RSA) for a group of 52 developing/transitional countries, using a dynamic panel data approach. The modeling framework is a Mankiw–Romer–Weil (MRW) conditional convergence model with path dependence and augmented by measures of the opportunities for RSA, namely indices for the extent of democracy and corruption control. The empirical analysis suggests that, for this group of countries, RSA retards economic growth, in that (i) democratic institutions — which are inimical to RSA, are growth enhancing and (ii) reduction in the extent of corruption is growth-enhancing if supported by well-developed democratic institutions. We find also that health is more relevant than educational participation as a measure of human capital development, that path dependence is absent where democracy is weak, and that the MRW model characterizes the growth process more successfully in the stronger democracies.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.sciencedirect.com/science/article/pii/S0264999313004525
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 37 (2014)
Issue (Month): C ()
Pages: 16-22

as
in new window

Handle: RePEc:eee:ecmode:v:37:y:2014:i:c:p:16-22
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712.
  2. Méon, Pierre-Guillaume & Weill, Laurent, 2010. "Is Corruption an Efficient Grease?," World Development, Elsevier, vol. 38(3), pages 244-259, March.
  3. M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
  4. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 407-443.
  5. Mendez, Fabio & Sepulveda, Facundo, 2006. "Corruption, growth and political regimes: Cross country evidence," European Journal of Political Economy, Elsevier, vol. 22(1), pages 82-98, March.
  6. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1990. "The Allocation of Talent: Implicationsfor Growth," University of Chicago - George G. Stigler Center for Study of Economy and State 65, Chicago - Center for Study of Economy and State.
  7. Scully, Gerald W, 1991. "Rent-Seeking in U.S. Government Budgets, 1900-88," Public Choice, Springer, vol. 70(1), pages 99-106, April.
  8. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-63, September.
  9. David de la Croix & Clara Delavallade, 2014. "Why corrupt governments may receive more foreign aid," Oxford Economic Papers, Oxford University Press, vol. 66(1), pages 51-66, January.
  10. Anderson, Gary Michael & Rowley, Charles K & Tollison, Robert D, 1988. "Rent Seeking and the Restriction of Human Exchange," The Journal of Legal Studies, University of Chicago Press, vol. 17(1), pages 83-100, January.
  11. Francesco Caselli & Gerardo Esquivel & Fernando Lefort, 1997. "Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Working Papers Central Bank of Chile 03, Central Bank of Chile.
  12. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
  13. Hartwig, Jochen, 2010. "Is health capital formation good for long-term economic growth? - Panel Granger-causality evidence for OECD countries," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 314-325, March.
  14. Paul M. Romer, 1994. "The Origins of Endogenous Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 3-22, Winter.
  15. Shankha Chakraborty & Era Dabla-Norris, 2005. "Rent Seeking," IMF Working Papers 05/43, International Monetary Fund.
  16. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
  17. Gelb, A & Knight, John B & Sabot, R H, 1991. "Public Sector Employment, Rent Seeking and Economic Growth," Economic Journal, Royal Economic Society, vol. 101(408), pages 1186-99, September.
  18. Mohtadi, Hamid & Roe, Terry L., 2001. "Democracy, Rent Seeking, Public Spending And Growth," Bulletins 12981, University of Minnesota, Economic Development Center.
  19. Sara Corujo & Marta Simões, 2012. "Democracy and Growth: Evidence for Portugal (1960–2001)," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 18(3), pages 512-528, March.
  20. Ismail M.Cole & M. Arshad Chawdhry, 2002. "Rent Seeking and Economic Growth:Evidence from a Panel of U.S.States," Cato Journal, Cato Journal, Cato Institute, vol. 22(2), pages 211-228, Fall.
  21. Narayan, Paresh Kumar & Narayan, Seema & Smyth, Russell, 2011. "Does democracy facilitate economic growth or does economic growth facilitate democracy? An empirical study of Sub-Saharan Africa," Economic Modelling, Elsevier, vol. 28(3), pages 900-910, May.
  22. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
  23. Stephen Bond & Anke Hoeffler, 2001. "GMM Estimation of Empirical Growth Models," Economics Series Working Papers 2001-W21, University of Oxford, Department of Economics.
  24. Anwar, Sajid & Cooray, Arusha, 2012. "Financial development, political rights, civil liberties and economic growth: Evidence from South Asia," Economic Modelling, Elsevier, vol. 29(3), pages 974-981.
  25. Park, Hyun & Philippopoulos, Apostolis & Vassilatos, Vanghelis, 2005. "Choosing the size of the public sector under rent seeking from state coffers," European Journal of Political Economy, Elsevier, vol. 21(4), pages 830-850, December.
  26. Svensson, Jakob, 1998. "Foreign aid and rent-seeking," Policy Research Working Paper Series 1880, The World Bank.
  27. Philip J. Grossman, 1988. "Government and Economic Growth: A Non-Linear Relationship," Monash Economics Working Papers archive-04, Monash University, Department of Economics.
  28. 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.
  29. Mork, Knut Anton, 1993. " Living with Lobbying: A Growth Policy Co-opted by Lobbyists Can Be Better than No Growth Policy at All," Scandinavian Journal of Economics, Wiley Blackwell, vol. 95(4), pages 597-605, December.
  30. Tollison, Robert D, 1982. "Rent Seeking: A Survey," Kyklos, Wiley Blackwell, vol. 35(4), pages 575-602.
  31. Evgeni Peev & Dennis C. Mueller, 2012. "Democracy, Economic Freedom and Growth in Transition Economies," Kyklos, Wiley Blackwell, vol. 65(3), pages 371-407, 08.
  32. Toke Aidt & Jayasri Dutta & Vania Sena, 2006. "Governance Regimes, Corruption and Growth: Theory and Evidence," Discussion Papers 15_2006, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
  33. Spinesi, Luca, 2009. "Rent-seeking bureaucracies, inequality, and growth," Journal of Development Economics, Elsevier, vol. 90(2), pages 244-257, November.
  34. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
  35. Ignacio Del Rosal, 2011. "The Empirical Measurement Of Rent‐Seeking Costs," Journal of Economic Surveys, Wiley Blackwell, vol. 25(2), pages 298-325, 04.
  36. César Calderãn & Alberto Chong, 2007. "Rent Seeking And Democracy: Empirical Evidence For Uruguay," Economic Inquiry, Western Economic Association International, vol. 45(3), pages 592-601, 07.
  37. David Laband & John Sophocleus, 1988. "The social cost of rent-seeking: First estimates," Public Choice, Springer, vol. 58(3), pages 269-275, September.
  38. Stephen Bond & Anke Hoeffler & Jonathan Temple, 2001. "GMM Estimation of Empirical Growth Models," Economics Papers 2001-W21, Economics Group, Nuffield College, University of Oxford.
  39. Anderson, T. W. & Hsiao, Cheng, 1982. "Formulation and estimation of dynamic models using panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 47-82, January.
  40. Bond, Stephen & Bowsher, Clive & Windmeijer, Frank, 2001. "Criterion-based inference for GMM in autoregressive panel data models," Economics Letters, Elsevier, vol. 73(3), pages 379-388, December.
  41. Harold J. Brumm, 1999. "Rent Seeking and Economic Growth: Evidence from the States," Cato Journal, Cato Journal, Cato Institute, vol. 19(1), pages 7-16, Spring/Su.
  42. Kiviet, Jan F., 1995. "On bias, inconsistency, and efficiency of various estimators in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 68(1), pages 53-78, July.
  43. Durden, Garey, 1990. "The Effect of Rent-Seeking on Family Income Levels: Some Suggestive Empirical Evidence," Public Choice, Springer, vol. 67(3), pages 285-91, December.
  44. Cheikbossian, Guillaume, 2003. "Property rights, rent-seeking and aggregate outcomes in transition economies," Economic Systems, Elsevier, vol. 27(3), pages 271-288, September.
  45. Knowles, Stephen & Owen, P. Dorian, 1995. "Health capital and cross-country variation in income per capita in the Mankiw-Romer-Weil model," Economics Letters, Elsevier, vol. 48(1), pages 99-106, April.
  46. Rama, Martin, 1993. "Rent seeking and economic growth : A theoretical model and some empirical evidence," Journal of Development Economics, Elsevier, vol. 42(1), pages 35-50, October.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:37:y:2014:i:c:p:16-22. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.