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Do Democracies Breed Rent-Seeking Behavior?

  • César Calderón
  • Alberto Chong

    ()

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.

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Paper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number 4415.

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Date of creation: Jun 2005
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Handle: RePEc:idb:wpaper:4415
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  1. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
  2. Luisa Zanforlin & Alberto E. Chong, 2001. "Inward-Looking Policies, Institutions, Autocrats, and Economic Growth in Latin America: An Empirical Exploration," IDB Publications (Working Papers) 6820, Inter-American Development Bank.
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  5. 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.
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  7. Alberto Chong & Luisa Zanforlin, 2004. "Inward-Looking Policies, Institutions, Autocrats, and Economic Growth in Latin America: An Empirical Exploration," Public Choice, Springer, vol. 121(3), pages 335-361, December.
  8. Alesina, A. & Drazen, A., 1991. "Why Are Stabilizations Delayed?," Papers 6-91, Tel Aviv - the Sackler Institute of Economic Studies.
  9. Takacs, Wendy E, 1981. "Pressures for Protectionism: An Empirical Analysis," Economic Inquiry, Western Economic Association International, vol. 19(4), pages 687-93, October.
  10. Keefer, Philip, 2004. "Elections, special interests, and the fiscal costs of financial crisis," Policy Research Working Paper Series 3439, The World Bank.
  11. Raymond Fisman, 2001. "Estimating the Value of Political Connections," American Economic Review, American Economic Association, vol. 91(4), pages 1095-1102, September.
  12. A. Chong & C. Calderón, 2000. "Causality and Feedback Between Institutional Measures and Economic Growth," Economics and Politics, Wiley Blackwell, vol. 12(1), pages 69-81, 03.
  13. Sendhil Mullainathan & Marianne Bertrand, 2001. "Do People Mean What They Say? Implications for Subjective Survey Data," American Economic Review, American Economic Association, vol. 91(2), pages 67-72, May.
  14. Wittman, Donald, 1989. "Why Democracies Produce Efficient Results," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1395-1424, December.
  15. Baldwin, Robert E, 1989. "The Political Economy of Trade Policy," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 119-35, Fall.
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