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Do Democracies Breed Rent-Seeking Behavior?

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  • César Calderón
  • Alberto Chong

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Abstract

Using objective institutional historical data we test the link between extent, duration, and transparency in democracies and rent-seeking behavior using time-series and panel data approaches. In this paper we focus on the case of Uruguay, an ethnically homogeneous country. We find three main results. First, democratic regimes are negatively linked with rent-seeking actions. Second, the longer the duration of democracy, the less rent-seeking in a society. Third, legislation enacted more transparently is negatively correlated with rent-seeking behavior. Our results are robust to the use of different econometric methods and basic robustness tests and are consistent with prevailing theory.

Suggested Citation

  • César Calderón & Alberto Chong, 2005. "Do Democracies Breed Rent-Seeking Behavior?," Research Department Publications 4415, Inter-American Development Bank, Research Department.
  • Handle: RePEc:idb:wpaper:4415
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    Cited by:

    1. César Calderón & Alberto Chong, 2006. "Rent Seeking and Democracy in Latin America: What Drives What?," Research Department Publications 4435, Inter-American Development Bank, Research Department.
    2. Rajeev K. Goel, 2012. "Business regulation and taxation: effects on cross-country corruption," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 15(3), pages 223-242, September.
    3. repec:hhs:bofitp:2008_010 is not listed on IDEAS
    4. Marco Pani, 2011. "Hold your nose and vote: corruption and public decisions in a representative democracy," Public Choice, Springer, vol. 148(1), pages 163-196, July.
    5. Helene Ehrhart, 2012. "Assessing the relationship between democracy and domestic taxes in developing countries," Economics Bulletin, AccessEcon, vol. 32(1), pages 551-566.
    6. Marco Pani, 2009. "Hold Your Nose and Vote; Why Do Some Democracies Tolerate Corruption?," IMF Working Papers 09/83, International Monetary Fund.
    7. César Calderón & Alberto Chong, 2006. "Búsqueda de rentas y democracia en América Latina: ¿Qué impulsa a qué?," Research Department Publications 4436, Inter-American Development Bank, Research Department.

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