This paper develops a model of political support which it links to economic growth. Governments face a trade-off between wealth creation and rent creation as sources of support. A low rent-seeking option maximizes support only if ‘inclusiveness,’ as defined here, is high. Otherwise state efforts to promote growth also promote rent seeking, and the rent-seeking effect comes to dominate the growth effect. In particular, rent seeking crowds out innovation and new product R&D. Depending on comparative political advantage, the quest for support can become the road to serfdom, but it can also become the road to an inclusive polity.

Additional Metadata
Publisher Department of Economics
Series Carleton Economic Papers
Note Revised 31 August 2017 and many times before; formerly titled “On Rent Seeking and Economic Growth” and “The Effect of Rent Seeking on Economic Growth”
Citation
Carson, Richard L. (2009). Economic Growth and the Exchange of Political Support for Rent (No. CEP 09-10). Carleton Economic Papers. Department of Economics.