Elsevier

World Development

Volume 14, Issue 12, December 1986, Pages 1457-1461
World Development

Adversary activities and per capita income growth

https://doi.org/10.1016/0305-750X(86)90043-4Get rights and content

Abstract

When some present or future markets are either imperfect or incomplete, the selfish motivations of individual agents may (but not necessarily) lead to rent-seeking activities that can make society worse off. Legal activities tend to raise the costs of doing business. Moreover, because they are biased in the direction of suits by firms and consumers against other firms, they may as a whole lower profit and hence both investment and growth rates relative to what they would be without such activities. This paper uses international cross-section data to provide a simple test of this hypothesis. Despite the crudeness of the test, the small size of the sample and possible ambiguities in interpretation, the results provide a tentative confirmation of the hypothesis.

References (15)

  • Kwang Choi

    A statistical test of the political economy of comparative growth rates model

    (1983)
  • Kwang Choi

    A Study of Comparative Rates of Economic Growth

    (1983)
  • Yujiro Hayami et al.

    Asian Village Economy at the Crossroads

    (1981)
  • Albert O. Hirschman

    Exit, Voice and Loyalty

    (1970)
  • Anne O. Krueger

    The political economy of the rent-seeking society

    American Economic Review

    (June 1974)
  • Peter Murrell

    The comparative structure of growth in the major developed capitalist nations

    Southern Economic Journal

    (April 1982)
There are more references available in the full text version of this article.

The authors express their gratitude to Bernard Peh for his research assistance, to Mancur Olson and Takahiro Miyao for encouragement and to Timur Kuran, Peter Gordon, Frank Easterbrook, Takahiro Miyao, Mustapha Nabli and two anonymous referees for comments.

View full text