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The Political Economy of Investment: Sclerotic Effects from Interest Groups

Author

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  • Bonnie Wilson

    () (Department of Economics, Saint Louis University)

  • Jac Heckelman

    () (Department of Economics, Wake Forest University)

Abstract

We investigate the relationship between interest group activity and investment by analyzing an un- balanced panel of observations on 126 countries over three time-periods. We nd that the number of interest groups in a nation is negatively related to investment, consistent with a sclerotic e¤ect due to rent-seeking by interest groups. Our ndings are robust to the inclusion of a variety of additional common controls in the speci cation, to potential outlying observations, and to varied sample selection procedures. We do nd, however, that the sclerotic impact of groups on investment is stronger across developed OECD countries than for the developing non-OECD countries.

Suggested Citation

  • Bonnie Wilson & Jac Heckelman, 2010. "The Political Economy of Investment: Sclerotic Effects from Interest Groups," Working Papers 2012-03, Saint Louis University, Department of Economics.
  • Handle: RePEc:slu:wpaper:2012-03
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    References listed on IDEAS

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    Cited by:

    1. Andrei Yakovlev & Andrei Govorun, 2011. "Industrial Associations as a Channel of Business-Government Interactions in an Imperfect Institutional Environment: The Russian Case," UCL SSEES Economics and Business working paper series 116, UCL School of Slavonic and East European Studies (SSEES).
    2. Jac C. Heckelman & Bonnie Wilson, 2013. "Institutions, Lobbying, and Economic Performance," Economics and Politics, Wiley Blackwell, vol. 25(3), pages 360-386, November.
    3. Dennis Coates & Jac Heckelman & Bonnie Wilson, 2011. "Special-interest groups and growth," Public Choice, Springer, vol. 147(3), pages 439-457, June.
    4. Frye, Timothy M. & Iwasaki, Ichiro, 2011. "Government directors and business–state relations in Russia," European Journal of Political Economy, Elsevier, vol. 27(4), pages 642-658.
    5. Neyapti, Bilin, 2013. "Modeling institutional evolution," Economic Systems, Elsevier, vol. 37(1), pages 1-16.
    6. Domenico Rossignoli, 2015. "Too many and too much? Special-interest groups and inequality at the turn of the century," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 130(3), pages 337-366.
    7. Christian Bjørnskov, 2014. "Do Economic Reforms Alleviate Subjective Well-Being Losses of Economic Crises?," Journal of Happiness Studies, Springer, vol. 15(1), pages 163-182, February.
    8. Yakovlev, A. & Govorun, A., 2011. "Business Associations as a Business-Government Liaison: An Empirical Analysis," Journal of the New Economic Association, New Economic Association, issue 9, pages 98-127.
    9. Salaber, Julie, 2013. "Religion and returns in Europe," European Journal of Political Economy, Elsevier, vol. 32(C), pages 149-160.

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