Economic Growth and the Exchange of Political Support for Rent
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.
|Publisher||Department of Economics|
|Series||Carleton Economic Papers (CEP)|
|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”|
Carson, R. L. (2009). Economic Growth and the Exchange of Political Support for Rent (No. CEP 09-10). Carleton Economic Papers (CEP). Department of Economics.