Lobbying and Growth: Explaining Differences among OECD Countries

The paper is an attempt to observe the effects of the development of rent-seeking or lobbying groups on the growth pace of a number of countries. The relationship between the policy suggestions of competing interest groups, and economic policies implemented both at micro and macro level after the 1980s revealed the importance of lobbying effect on policies fostering or inhibiting most of the developing countries’ long-run growth levels. In addition to the vast literature on the positive theory of regulation and the theories of competition among the pressure groups, the current study is to provide some examples of the literature on lobbying and its effects on growth. Taking from Mancur Olson’s inspiring book, The Rise and Decline of Nations, this paper reviews the following literature and discussions with special emphasis on Gary Becker and Kevin M. Murphy’s works while adding an empirical component whether it is a panel or cross-country data analysis. Availability of the relevant data is a major concern due to the inconsistencies in measuring the size and effect of lobbying for each country. A set of countries including only the OECD members will constitute the subject of the empirical investigation. The dataset on the special interest groups is provided from K.G. Saur’s World Guide to Trade Associations as do the previous studies. For the purpose of the further research, some derivations and proposals would be provided to solve the puzzle. The study has the intuition that the development of lobbying powers is closely related to other political factors effective on growth rates such as democracy, civil society. Overall, the paper is to investigate the role of lobbying on growth rates on a multi-country level while implying the effects to change relatively in accordance with country specific effects. Thus the conclusion will state that depending on the country specific patterns, each OECD member exhibits slightly different effects of the relative size –by proxies- and number of business interest groups on growth due to the country specific effects. This work specifically focuses on Turkey which is shown to have negligible effect on the overall club members in terms of special interest groups on growth.