Institutions, Lobbying, and Economic Performance

27 Pages Posted: 11 Oct 2013

See all articles by Jac C. Heckelman

Jac C. Heckelman

Wake Forest University - Department of Economics

Bonnie Wilson

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Date Written: November 2013

Abstract

We investigate whether the impact of institutions depends not just on their current state but also on how they came to be. In particular, we hypothesize that while economic freedom that emerges spontaneously may be growth promoting, economic freedom that emerges as a result of costly lobbying efforts may be less fruitful. In an extreme case, costly lobbying efforts may even negate the growth‚Äźenhancing effect of economic freedom. To the extent that lobbying efforts constitute an opportunity cost of resources diverted away from investment and production, our hypothesis also implies that greater the opportunity cost of lobbying, the more efficient is the institutional environment. Panel data analysis reveals the expected positive relation between economic freedom and growth, and consistent with our hypothesis, the findings indicate that the impact of economic freedom on growth does indeed diminish as lobbying efforts increase. In addition, we find that lobbying is more harmful to growth at greater levels of economic freedom.

Suggested Citation

Heckelman, Jac C. and Wilson, Bonnie, Institutions, Lobbying, and Economic Performance (November 2013). Economics & Politics, Vol. 25, Issue 3, pp. 360-386, 2013, Available at SSRN: https://ssrn.com/abstract=2338790 or http://dx.doi.org/10.1111/ecpo.12016

Jac C. Heckelman (Contact Author)

Wake Forest University - Department of Economics ( email )

P.O. Box 7505
Winston-Salem, NC 27109
United States
(336) 758-5923 (Phone)
(336) 758-6028 (Fax)

HOME PAGE: http://www.wfu.edu/~heckeljc/jac.htm

Bonnie Wilson

affiliation not provided to SSRN

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
0
Abstract Views
1,259
PlumX Metrics