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Parasites

  • Halvor Mehlum

    (University of Oslo)

  • Kalle Moene

    (University of Oslo)

  • Ragnar Torvik

    (University of Trondheim)

Unproductive enterprises that feed on productive businesses, are rampant in developing countries. A consequence of parasitic enterprises is that societies may be locked into a self enforcing configuration of beliefs and practices that result in persistent poverty. When entrepreneurs of both productive and parasitic enterprises are drawn from the same limited pool of entrepreneurs, the rise of parasitic profit opportunities may cause economic stagnation and underdevelopment that in turn enhance the profitability of parasitic enterprises relative to productive enterprises. Thus parasitic rent appropriation may induce stagnation, while stagnation may induce parasitic activities. Together the two links can lead developing economies into a poverty trap.

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File URL: http://econwpa.repec.org/eps/dev/papers/0406/0406003.pdf
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Paper provided by EconWPA in its series Development and Comp Systems with number 0406003.

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Length: 20 pages
Date of creation: 05 Jun 2004
Date of revision:
Handle: RePEc:wpa:wuwpdc:0406003
Note: Type of Document - pdf; pages: 20
Contact details of provider: Web page: http://econwpa.repec.org

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  11. Mehlum, Halvor & Moene, Karl-Ove & Torvik, Ragnar, 2003. "Plunder & Protections Inc," Memorandum 10/2002, Oslo University, Department of Economics.
  12. Konrad, Kai A & Skaperdas, Stergios, 1998. "Extortion," Economica, London School of Economics and Political Science, vol. 65(260), pages 461-77, November.
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  15. Herschel I. Grossman, 1999. "Producers and Predators," NBER Working Papers 6499, National Bureau of Economic Research, Inc.
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