Rent Seeking and Democracy in Latin America: What Drives What?

22 Pages Posted: 25 Apr 2011

Date Written: January 2006

Abstract

Drawing on previously unused objective institutional data, we provide evidence for the causal link between rent-seeking behavior and democracy in Uruguay, a country where both rent-seeking behavior and political shifts have varied widely in the last 80 years, but where ethnolinguistic heterogeneity and income inequality have remained historically low. The latter helps better identify some “pure” political interactions and how they are linked with rent-seeking outcomes. We find that the presence and duration of democratic regimes appear to have been conducive to a decrease in rent-seeking actions in Uruguay, although the reduction in rent seeking does not appear to have had a bearing on the quality of democratic regime in the country. While the duration of democratic regime may impact rent-seeking behavior, rent seeking also displays a causal link to democratic duration.

Suggested Citation

Calderon, Cesar A. and Chong, Alberto, Rent Seeking and Democracy in Latin America: What Drives What? (January 2006). IDB Working Paper No. 454, Available at SSRN: https://ssrn.com/abstract=1820027 or http://dx.doi.org/10.2139/ssrn.1820027

Cesar A. Calderon (Contact Author)

Central Bank of Chile ( email )

Agustinas 1180
Santiago
Chile

Alberto Chong

University of Ottawa ( email )

2292 Edwin Crescent
Ottawa, Ontario K2C 1H7
Canada

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