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Rent Seeking Opportunities and Economic Growth in Transitional Economies

  • Nasir Iqbal

    (Pakistan Institute of Development Economics, Islamabad)

  • Vince Daly

    (Department of Economics Kingston University, UK)

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 modelling framework is a Mankiw-Romer-Weil (MRW) conditional convergence model augmented by measures of the opportunities for RSA, namely indices for the extent of democracy and corruption control. We find that health is more relevant than educational participation as a measure of human capital development in the MRW model. The overall empirical analysis shows that RSA retards economic growth, in that democratic institutions, which are inimical to RSA, are growth enhancing. We also find that reduction in the extent of corruption is only growth-enhancing if supported by well-developed democratic institutions.

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Paper provided by Pakistan Institute of Development Economics in its series PIDE-Working Papers with number 2013:87.

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Length: 22 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:pid:wpaper:2013:87
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