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The Proliferation of Fiscal Incentives and the Nicaraguan State as a Manager of Rents: A Political Economy Perspective on Nicaraguan Industrial Policy Since 1990

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  • Maas, Hauke

Abstract

This paper finds that the proliferation of fiscal incentives in the form of tax exemptions in Nicaragua since 1990 represents the indiscriminate allocation of monopoly rents to interest groups. While theory suggests some rents can encourage productive investments, Nicaragua’s tax incentives are merely “assistentialist” and lack effectiveness. For a dynamic industrial policy, opportunity costs would need to be taken into account and rents would need to be performance contingent, which requires selectivity and increased transparency.

Suggested Citation

  • Maas, Hauke, 2006. "The Proliferation of Fiscal Incentives and the Nicaraguan State as a Manager of Rents: A Political Economy Perspective on Nicaraguan Industrial Policy Since 1990," MPRA Paper 2335, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:2335
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    File URL: https://mpra.ub.uni-muenchen.de/2335/1/MPRA_paper_2335.pdf
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    More about this item

    Keywords

    Nicaragua; industrial policy; political economy; fiscal incentives; tax incentives; monopoly rents; rent-seeking;

    JEL classification:

    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • L5 - Industrial Organization - - Regulation and Industrial Policy

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