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Destructive Competition: Factionalism and Rent-Seeking in Iran

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  • Bjorvatn, Kjetil
  • Selvik, Kjetil

Abstract

Summary The literature on the "resource curse" suggests that the quality of institutions determines a country's ability to transform resource wealth into economic development. This article explores the link between resource rents, institutions, and economic performance by focusing on the case of Iran. A key feature of Iran's institutional environment is its factionalized political system. We give an introduction to the main actors vying for control over the country's resources and analyze the effect of their destructive competition. Using a theoretical model, we study how oil revenues and the relative strength of interest groups affect private investment and economic efficiency.

Suggested Citation

  • Bjorvatn, Kjetil & Selvik, Kjetil, 2008. "Destructive Competition: Factionalism and Rent-Seeking in Iran," World Development, Elsevier, vol. 36(11), pages 2314-2324, November.
  • Handle: RePEc:eee:wdevel:v:36:y:2008:i:11:p:2314-2324
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    References listed on IDEAS

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    1. Torvik, Ragnar, 2002. "Natural resources, rent seeking and welfare," Journal of Development Economics, Elsevier, vol. 67(2), pages 455-470, April.
    2. Xavier Sala-i-Martin & Arvind Subramanian, 2013. "Addressing the Natural Resource Curse: An Illustration from Nigeria," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 22(4), pages 570-615, August.
    3. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2006. "Institutions and the Resource Curse," Economic Journal, Royal Economic Society, vol. 116(508), pages 1-20, January.
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    5. Hodler, Roland, 2006. "The curse of natural resources in fractionalized countries," European Economic Review, Elsevier, vol. 50(6), pages 1367-1386, August.
    6. Philip R. Lane & Aaron Tornell, 1999. "The Voracity Effect," American Economic Review, American Economic Association, vol. 89(1), pages 22-46, March.
    7. Kohli, Inderjit & Singh, Nirvikar, 1999. "Rent Seeking and Rent Setting with Asymmetric Effectiveness of Lobbying," Public Choice, Springer, vol. 99(3-4), pages 275-298, June.
    8. Bulte, Erwin H. & Damania, Richard & Deacon, Robert T., 2005. "Resource intensity, institutions, and development," World Development, Elsevier, vol. 33(7), pages 1029-1044, July.
    9. Baland, Jean-Marie & Francois, Patrick, 2000. "Rent-seeking and resource booms," Journal of Development Economics, Elsevier, vol. 61(2), pages 527-542, April.
    10. Asim Ijaz Khwaja & Atif Mian, 2005. "Do Lenders Favor Politically Connected Firms? Rent Provision in an Emerging Financial Market," The Quarterly Journal of Economics, Oxford University Press, vol. 120(4), pages 1371-1411.
    11. Nitzan, Shmuel, 1994. "Modelling rent-seeking contests," European Journal of Political Economy, Elsevier, vol. 10(1), pages 41-60, May.
    12. Sachs, Jeffrey D. & Warner, Andrew M., 2001. "The curse of natural resources," European Economic Review, Elsevier, vol. 45(4-6), pages 827-838, May.
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    Citations

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    Cited by:

    1. Mohammad Reza Farzanegan, 2012. "Resource Wealth and Entrepreneurship: A Blessing or a Curse?," MAGKS Papers on Economics 201224, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    2. Tohid Atashbar, 2013. "Iranian Disease: Why a Developing Country's Government Did Not Listen to Economists' Advices," American Journal of Economics and Sociology, Wiley Blackwell, vol. 72(3), pages 732-760, July.
    3. repec:eee:ecmode:v:68:y:2018:i:c:p:205-216 is not listed on IDEAS
    4. Naghavi, Alireza & Pignataro, Giuseppe, 2015. "Theocracy and resilience against economic sanctions," Journal of Economic Behavior & Organization, Elsevier, vol. 111(C), pages 1-12.
    5. Mohammad Reza Farzanegan & Mohammad Habibpour, 2014. "Direct Distribution of Rents and the Resource Curse in Iran: A Micro-econometric Analysis," CESifo Working Paper Series 4824, CESifo Group Munich.
    6. Christian Dreger & Teymur Rahmani, 2016. "The impact of oil revenues on the Iranian economy and the Gulf states," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 40(1), pages 36-49, March.
    7. Dong-Hyeon Kim & Shu-Chin Lin, 2017. "Natural Resources and Economic Development: New Panel Evidence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 66(2), pages 363-391, February.
    8. Bjorvatn, Kjetil & Farzanegan, Mohammad Reza & Schneider, Friedrich, 2012. "Resource Curse and Power Balance: Evidence from Oil-Rich Countries," World Development, Elsevier, vol. 40(7), pages 1308-1316.
    9. Parcero, Osiris J. & Papyrakis, Elissaios, 2016. "Income inequality and the oil resource curse," Resource and Energy Economics, Elsevier, vol. 45(C), pages 159-177.
    10. Mohammad Reza Farzanegan, 2014. "Can Oil-Rich Countries Encourage Entrepreneurship? ‘Yes’, ‘No’ but not ‘Perhaps’," MAGKS Papers on Economics 201406, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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