Rent-Extraction, Liberalism, and Economic Development
Roger D. Congleton
West Virginia University - Department of Economics; George Mason University - Center for Study of Public Choice; George Mason University - Department of Economics
April 2, 2010
This paper argues that liberalism helped the West escape from their long-standing rent-extracting regimes and created institutional sources of comparative advantage in trade and economic development. It does so by providing connections between three different literatures: the constitutional political economy literature, the rent-seeking literature, and the economic development literature.
The rent-extraction model of the state predicts that mercantilist policies will be adopted, rather than free trade. The rent-extraction model of the state also implies that the politics of economic liberalization tends to be problematic. This allows liberalization, once adopted, to be a nearly permanent source of comparative advantage that affects long-run trade flows and patterns of international development. Export-led growth, however, is an area of reform that can be politically feasible within rent-extracting regimes, which makes it the most likely first step in economic and political liberalization.
Number of Pages in PDF File: 30
Keywords: liberalization, rent extraction, rent seeking, economic development, public choice
JEL Classification: H11, D6, F1working papers series
Date posted: September 2, 2009 ; Last revised: April 22, 2010
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo5 in 0.359 seconds