Quarterly Journal of Quantitative Economics

Current Issue

By Issue

By Author

By Subject

Author Index

Keyword Index

About Journal

Aims and Scope

Editorial Board

Publication Ethics

Indexing and Abstracting

Related Links

FAQ

Peer Review Process

Investigating the Impact of Property Rights on Rent-seeking in Selected OPEC and OECD Countries

Document Type : Research Paper

Authors

1 * M.S. in Economics, Faculty of Economics, Management, and Social Sciences, Shiraz University, Shiraz, Iran.

2 Professor of Economics, Faculty of Economics, Management, and Social Sciences, Shiraz University, Shiraz, Iran.

3 Associate Professor of Economics, Faculty of Economics, Management, and Social Sciences, Shiraz University, Shiraz, Iran.

Abstract

EXTENDED ABSTRACT
INTRODUCTION
Governments intervene in the economy because of correcting market failures and providing public goods, externalities, asymmetric information and increasing efficiency. But sometimes these intervention lead to the emergence of rent-seeking behavior. Rent-seeking has many bad effects, For example reducing creativity and innovation, spreading the individual rules and regulations, Prevalence of bribery and bribery, and distorting the structure of economic and social motivation and welfare loss. Therefore, it is important to identify the factors that influence the rent-seeking. By investigating and controlling these factors, it is possible to reduce the formation of rent-seeking and lead the economic growth and development.
 
METHODOLOGY
This article investigates the influencing factors on rent-seeking in two groups of selected oil exporting countries (OPEC) and selected countries from the Organization for Economic Cooperation and Development from 1996 to 2017. For this purpose, panel data regression is used. At first, by using Hadri-Rao test (a valid test that is including structural failure), the stationary of the data is checked and other pre-estimation tests are performed. Then, due to cross-sectional dependence, heterogeneity of variance and autocorrelation between the disturbance term in both groups of selected oil exporting countries and selected countries of Organization for Economic Cooperation and Development, the considered patterns are estimated using the Driscoll-Cray method.
 
 
FINDINGS
The empirical findings of this article indicates that in both mentioned groups, property rights, democracy and GDP per capita have a negative and significant effect, and military and inflation have a positive and significant effect on rent-seeking. The results also show that in the selected countries of the Organization for Economic Cooperation and Development, with the increase in education, the rent-seeking decreases. In addition, the increase in education has a significant and positive effect on rent-seeking exporting countries. Also, in oil exporting countries, oil rent has a positive and significant effect on rent-seeking. This result means that, with the increase of oil rent in these countries, people's motivation to do productive work decreases and they do more distribution activities.
 
CONCLUSION
The results of this study shows that property rights have a negative and significant effect on the formation of rent-seeking in both groups. With an increase of 1 unit in property rights, the formation of rent-seeking activities in Petroleum Exporting Countries decreases by 0.06 units and in the Economic Cooperation and Development countries , it decreases by 0.152 units. Military has a positive and significant effect on rent-seeking in both categories. With the increase of 1 unit in military, the possibility of rent-seeking in OPEC increases by 0.938 units and in OECD by 0.374 units.
Also, an increase of 1 unit of democracy decreases of 0.911 and 0.197 units of rent-seeking in the OPEC and OECD groups, respectively, and has a significant effect. The next variable is education. In oil-exporting countries, education has a positive and significant effect on rent-seeking, and if one unit of education increase, rent-seeking increases by 0.119 units. But in OECD countries, education has a negative and significant effect on the formation of rent-seeking, and with an increase of 1 unit of education, rent-seeking decreases by 0.1 unit. The next factor is GDP per capita, which increases by 1 unit and it causes rent-seeking in both OPEC and OECD countries increase by 0.0001 units, and this effect is significant. In addition, oil rent in OPEC countries has a positive and significant effects on formation of rent-seeking. If the oil rent increases by 1 unit, the formation of rent-seeking increases by 0.146 units. Finally, inflation in both categories of countries has a positive and significant effect on rent-seeking. When the inflation increases by 1 unit, rent-seeking is increased in OPEC and OECD by 0.101 and 0.264, respectively.

Keywords

Main Subjects

References
Acemoglu, D., Johnson, S., & Robinson, J. A. (2005). Institutions as a fundamental cause of long-run growth. Handbook of economic growth, 1, 385-472.
Akhter, S. T., & Manzoor, F. (2015). Openness of economy, foreign investment inflows and the phenomenon of rent seeking corruption. Eurasian Journal of Economics and Finance, 3(3), 45-64.
Alchian, A. A. (1967). Pricing and society. Institute of Economic Affairs (Great Britain).
Allen, D. W., & Lueck, D. (2005). Agricultural contracts. In Handbook of new institutional economics (pp. 465-490). Springer, Boston, MA.
Alston, L. J., & Mueller, B. (2008). Property rights and the state. In Handbook of new institutional economics (pp. 573-590). Springer, Berlin, Heidelberg.
Appelbaum, E., & Katz, E. (1986). Rent seeking and entry. Economics Letters, 20(3), 207-212.
Åslund, A., Boone, P., & Johnson, S. (2001). Escaping the under-reform trap. IMF Economic Review, 48(1), 88-108.
Baghchghi, A. khoshnoodi, A. Herati, J. (2019). Investigating the Interaction of Democracy and Property Rights Security on Corruption in Selected Countries. Quarterly Journal of Economic Research,109-144. Avajlable at: https://www.sid.ir/paper/370103/fa (In Persian).
Ball, A. R., & Millard, F. (1986). Pressure politics in industrial societies: A comparative introduction. London: Macmillan.
Bardhan, P. (1997). Corruption and development: a review of issues. Journal of Economic Literature, 35(3), 1320-1346
Barro, R. J. (1991). Economic growth in a cross section of countries. The quarterly journal of economics, 106(2), 407-443.
Becker, G. S. (2009). Human capital: A theoretical and empirical analysis, with special reference to education. University of Chicago press.
Benson, B. L. (1984). Rent seeking from a property rights perspective. Southern Economic Journal, 51(2), 388-400.
Berdugo, B., & Meir, U. (2009). Education, rent seeking and growth. Available at SSRN 1499078.
Bjørnskov, C. (2012). How does social trust affect economic growth?. Southern Economic Journal, 78(4), 1346-1368.
Blackburn, K., Bose, N., & Haque, M. E. (2010). Endogenous corruption in economic development. Journal of Economic Studies, 37(1), 4 – 25.
Braun, M., & Di Tella, R. (2004). Inflation, inflation variability, and corruption. Economics & Politics, 16(1), 77-100.
Buchanan, J. M. (1983). Rent seeking, noncompensated transfers, and laws of succession. The Journal of Law & Economics, 26(1), 71-85.
Bulte, E. H., Damania, R., & Deacon, R. T. (2003). Resource abundance, poverty and development (No. 854-2016-56192).
Calderon, C., & Chong, A. (2007). Rent seeking and democracy: empirical evidence for Uruguay. Economic Inquiry, 45(3), 592-601.
Carneiro, F. (2007, April). Development challenges of resource-rich countries: the case of oil exporters. In Proceedings of the VI International Colloquium (pp. 115-140).
Cervelló-Royo, R., Moya-Clemente, I., Perelló-Marín, M. R., & Ribes-Giner, G. (2020). Sustainable development, economic and financial factors, that influence the opportunity-driven entrepreneurship. An fsQCA approach. Journal of Business Research, 115, 393-402..
Chakraborty, S., & Dabla-Norris, E. (2006). Rent seeking. IMF Staff Papers, 53(1), 28-49.
Cheikbossian, G. (2008). Heterogeneous groups and rent-seeking for public goods. European Journal of Political Economy, 24(1), 133-150.
Chen, C. J., Li, Z., Su, X., & Sun, Z. (2011). Rent-seeking incentives, corporate political connections, and the control structure of private firms: Chinese evidence. Journal of Corporate Finance, 17(2), 229-243.
Ciabuschi, F., Dellestrand, H., & Kappen, P. (2012). The good, the bad, and the ugly: Technology transfer competence, rent-seeking, and bargaining power. Journal of World Business, 47(4), 664-674.
Clague, C., Keefer, P., Knack, S., & Olson, M. (1996). Property and contract rights in autocracies and democracies. Journal of economic growth, 1(2), 243-276.
Coe, D. T., Helpman, E., & Hoffmaister, A. W. (1997). North-south R & D spillovers. The Economic Journal, 107(440), 134-149.
Coffman, R. B. (1993). Tax abatements and rent-seeking. Urban Studies, 30(3), 593-59.
Collier, P., & Goderis, B. (2009). Commodity prices, growth, and the natural resource curse: reconciling a conundrum. Growth, and the Natural Resource Curse: Reconciling a Conundrum (June 5, 2008).
Corchón, L. C. (2008). Forms of governance and the size of rent-seeking. Social Choice and Welfare, 30(2), 197-210.
Coyne, C. J., Michaluk, C., & Reese, R. (2016). Unproductive entrepreneurship in US military contracting. Journal of Entrepreneurship and Public Policy, 5(2), 221-239.
Davis, G. A., & Tilton, J. E. (2005, August). The resource curse. In Natural resources forum (Vol. 29, No. 3, pp. 233-242). Oxford, UK: Blackwell Publishing, Ltd.
Dzhumashev, R. (2014). Corruption and growth: The role of governance, public spending, and economic development. Economic Modelling, 37, 202-215.
Eloranta, J. (2009). Rent seeking and collusion in the military allocation decisions of Finland, Sweden, and Great Britain, 1920–38 1. The Economic History Review, 62(1), 23-44.
Faccio, M. (2002). Politically-connected firms: Can they squeeze the State?. Available at SSRN 305099.
Furubotn, E. G., & Pejovich, S. (1972). Property rights and economic theory: A survey of recent literature. Journal of Economic literature, 10(4), 1137-1162.
Gwartney, J. D., & Wagner, R. E. (1988). The public choice revolution. Intercollegiate Studies Institute.
Hadri, K., & Rao, Y. (2008). Panel stationarity test with structural breaks. Oxford Bulletin of Economics and statistics, 70(2), 245-269.
Hall, R. E., & Jones, C. I. (1999). Why do some countries produce so much more output per worker than others?. The quarterly journal of economics, 114(1), 83-116.
Hoechle, D. (2007). Robust standard errors for panel regressions with cross-sectional dependence. The Stata Journal, 7(3), 281-312.
Hosseini, M, Ahmadi Shadmehri, M, T. & Gorjipour, M, J. (2021). Investigating the Effect of Democracy on the Relationship between Economic Growth and Income Inequality in Iran. Quarterly Journal of Quantitative Economics, 18(1), 1-16. Doi: 10.22055/jqe.2020.29003.2058 (In Persian).
Hosseini Yazdi, S, Emadzadeh, M, & Daei Karimzadeh, S. (2022). Globalization, Human Capital Accumulation and Economic Growth in selected Developed and Developing Countries. Quarterly Journal of Quantitative Economics, 18(4), 110- 150. Doi: 10.22055/jqe.2020.32690.2222 (In Persian).
Infante, D., & Smirnova, J. (2009). Entrepreneurship, rent-seeking spillovers and decreasing returns: A microeconomic approach. Journal of Acta Oeconomica,59(1), 79-89.
Infante, D., & Smirnova, J. (2009). Rent-seeking under a weak institutional environment. Economics Letters, 104(3), 118-121.
Kanatas, G., & Stefanadis, C. (2016). Rent-Seeking, Property Rights, and the Sentiment of Guilt. Available at SSRN 2739853.
Katz, E., & Rosenberg, J. (1989). Rent-seeking for budgetary allocation: Preliminary results for 20 countries. Public Choice, 60(2), 133-144.
Katz, E., & Tokatlidu, J. (1996). Group competition for rents. European Journal of Political Economy, 12(4), 599-607.
Kazemi, M. (2004). Rent with a look at this problem in Iran. Quarterly Journal of New Economy, 103, p. 53-65.
Khasawneh, S. (2011). Human Capital planning in higher education institutions: A strategic human resource development initiative in Jordan. International Journal of Educational Management, 25(6), 534-544.
Khezri, M. (2003).Rent-seeking and economic development. Quarterly Journal of Economic Research and Policy, 28, p. 93- 11 Available at: https://sid.ir/paper/420310/fa. (In Persian)
Khezri, M. (2005). Rent-seeking economy. Publications of the Management and Planning Organization of the country, first edition. (In Persian).
Kim, S., Yoo, & Y. H. (2007) Policies to Reduce Rent Seeking in Controlled Markets; International Economic Journal, 21(1): 27–47
Kimenyi, M. S., & Mbaku, J. M. (1993). Rent-seeking and institutional stability in developing countries. Public Choice, 77(2), 385-405.
Krueger, A. O. (1974). The political economy of the rent-seeking society. The American economic review, 64(3), 291-303.
Kuru, A. (2002). The rentier state model and Central Asian studies: The Turkmen case. Alternatives: Turkish Journal of International Relations, 1(1), 51-71.
Leblang, David A. (1996). “Property Rights, Democracy and Economic Growth”. Political Research Quarterly 49 (1): 5-26.
Libecap, G. D. (2005). State regulation of open-access, common-pool resources. In Handbook of new institutional economics (pp. 545-572). Springer, Berlin, Heidelberg.
Lima, M. S. M., & Delen, D. (2020). Predicting and explaining corruption across countries: A machine learning approach. Government Information Quarterly, 37(1), 101407.
Lochner, L. (2004). Education, work, and crime: A human capital approach. International Economic Review, 45(3), 811-843.
Lochner, L. (2011). Non-production benefits of education: Crime, health, and good citizenship (No. w16722). National Bureau of Economic Research.
Lu, D. (1994). The entrepreneurs who do both: Production and rent-seeking. Journal of Economic Behavior & Organization, 23(1), 93-98.
Mance, D., & Pečarić, M. (2016, September). Relationship between Property Rights Enforcement and Corruption–Panel Analysis of EU Countries. In Economic and Social Development (Book of Proceedings), 16th International Scientific Conference on Economic and Social Development–“Legal Challenges of Modern World (pp. 771-778). Mazumdar, K. (2005). Socio-economic factors determining adult literacy in developing countries. International Journal of Social Economics, 32(1/2), 98-120.
Mbaku, J. M. (1991a). Military expenditures and bureaucratic competition for rents. Public Choice, 71(1-2), 19-31.
Mbaku, J. M. (1991b). Property rights and rent seeking in South Africa. Cato J., 11, 135.
Mbaku, J. M. (1995). Democracy in Africa: Rent Seeking as a Constraint on Policy Reform. Australian Journal of Politics & History, 41(2), 205-218.
Mbaku, J. M. (Ed.). (1998). Corruption and the crisis of institutional reforms in Africa (Vol. 47). Edwin Mellen Press.
McGuire, M. C., & Olson, M. (1996). The economics of autocracy and majority rule: the invisible hand and the use of force. Journal of Economic Literature, 34(1), 72-96.
Mehlum, H., Moene, K., & Torvik, R. (2006). Cursed by resources or institutions?. World Economy, 29(8), 1117-1131.
Meissner, H. (2010). The resource curse and rentier states in the Caspian region: A need for context analysis.
Miettinen, T., & Poutvaara, P. (2015). Parties as efficiency-improving gatekeepers in rent-seeking societies. European Journal of Political Economy, 38, 87-101.Mitsopoulos, M., & Pelagidis, T. (2007). Rent‐Seeking and Ex Post Acceptance of Reforms in Higher Education. Journal of Economic Policy Reform, 10(3), 177-192.
Mohtadi, H., & Roe, T. L. (2003). Democracy, rent seeking, public spending and growth. Journal of Public Economics, 87(3-4), 445-466.
Morck, R., Sepanski, J., & Yeung, B. (2001). Habitual and occasional lobbyers in the US steel industry: An EM algorithm pooling approach. Economic Inquiry, 39(3), 365-378.
Morck, R., & Yeung, B. (2004). Family control and the rent–seeking society. Entrepreneurship theory and practice, 28(4), 391-409.
Mudambi, R., Navarra, P., & Paul, C. (2002). Institutions and market reform in emerging economies: A rent seeking perspective. Public Choice, 112(1), 185-202.
Murphy, K. M., Shleifer, A., & Vishny, R. W. (1990). The allocation of talent: Implications for growth. The quarterly journal of economics, 106(2), 503-530.
Murphy, K. M., Shleifer, A., & Vishny, R. W. (1993). Why is rent-seeking so costly to growth?. The American Economic Review, 83(2), 409-414.
Ngo, T. W. (2008). Rent-seeking and economic governance in the structural nexus of corruption in China. Crime, Law and Social Change, 49(1), 27-44.
North, D. C., & Weingast, B. R. (1989). Constitutions and commitment: the evolution of institutions governing public choice in seventeenth-century England. The journal of economic history, 49(4), 803-832.
Olson, M. Jr. 1971. The logic of Collective Action: Public Goods and the Theory of Group. New York: Schocken Book.
Park, H., Philippopoulos, A., & Vassilatos, V. (2005). Choosing the size of the public sector under rent seeking from state coffers. European Journal of Political Economy, 21(4), 830-850.
Peev, E., & Mueller, D. C. (2012). Democracy, economic freedom and growth in transition economies. Kyklos, 65(3), 371-407.
Pejovich, S. (1990). The economics of property rights: Towards a theory of comparative systems (Vol. 22). Springer Science & Business Media.
Pejovich, S. (1991). Book Review: Marxism and Worders' Self-Management: The Essential Tension. Cato Journal, 11(2), 327-329.
Polterovich, V. (2001). Rent seeking, tax policy, and economic growth. Tax Policy, and Economic Growth.
Posner, R. A. (1974). The social costs of monopoly and regulation. Journal of political Economy, 83(4), 807-827.
Rabiee, M. (2009). The Effect of Innovation and Human Capital on Iran’s Economic Growth. Quarterly Journal of Knowledge and Development, Year 16, Issue 26, Spring 2009. Available at: https://www.sid.ir/paper/75738/fa (In Persian).
Renger, J., & Wolff, B. (2000). Rent seeking in irrigated agriculture: Institutional problem areas in operation and maintenance. Universum Verlag-Anst..
Ross, M. L. (2001). Does oil hinder democracy?. World politics, 53(3), 325-361.
Rubin, P. H. (2008). Legal systems as frameworks for market exchanges. In Handbook of new institutional economics (pp. 205-228). Springer, Berlin, Heidelberg.
Samadi, A. H.(2010). Property Rights in Economic Thoughts With Emphasias on Institutional School. Law Quarterly Journal, 3, 229-246. Available at: https://jlq.ut.ac.ir/article_29516. (in Persian).
Sassi, S., & Gasmi, A. (2017). The Dynamic Relationship Between Corruption—Inflation: Evidence from Panel Vector Autoregression. The Japanese Economic Review, 68(4), 458-469.
Sepehrdoust, H., & Berjisian, A. (2016). Impact of Compound Democracy Variables on Corruption Control; with Special Reference to Property Rights. Journal of Monetary and Banking Research , 9(29), 457-485.‎ Available at: https://jmbr.mbri.ac.ir/article-1-471-en.html (in Persian).
Shirley, M. M. (2005). Institutions and development. In Handbook of new institutional economics (pp. 611-638). Springer, Boston, MA.
Sonin, K. (2003). Why the rich may favor poor protection of property rights. Journal of comparative Economics, 31(4), 715-731.
Tornell, A., & Lane, P. R. (1999). The voracity effect. American economic review, 89(1), 22-46.
Tullock, G. (1967). The welfare costs of tariffs, monopolies, and theft. Western Economic Journal, 5(3), 224- 232
Weede, E. (1984). Democracy, creeping socialism, and ideological socialism in rent-seeking societies. Public Choice, 44(2), 349-366.
Weede, E. (1986). Rent seeking, military participation, and economic performance in LDCs. Journal of Conflict Resolution, 30(2), 291-314.
Weede, E. (1990). Democracy, party government and rent‐seeking as determinants of distributional inequality in industrial societies. European Journal of Political Research, 18(5), 515-533.
Wintrobe, R., Breton, A., Galeotti, G., & Salmon, P. (1997). Understanding democracy: economic and political perspectives. Cambridge University Press.
Woods, D. (2003). The tragedy of the cocoa pod: rent-seeking, land and ethnic conflict in Ivory Coast. The Journal of Modern African Studies, 41(4), 641-655.
Yazdani, F. (2003). Generating Rent Gravity of Municipal Revenue System. Quarterly Journal of Urban Mangement Studies, 13, pp. 1-17. Available at: https://www.sid.ir/paper/470839/fa. (In Persian).
Yeldan, A. E., & Roe, T. L. (1991). Political economy of rent-seeking under alternative trade regimes. Review of World Economics, 127(3), 563-583.
Ata, A. Y., & Arvas, M. A. (2011). Determinants of economic corruption: a cross-country data analysis. International Journal of Business and Social Science, 2(13), 161-169.
Ylmaz Ata, A., & Arvas, M. A. (2011). Determinants of economic corruption: a cross-country data analysis. International Journal of Business and Social Science, 2(13), 161-169.
 
Quarterly Journal of Quantitative Economics
Volume 19, Issue 3 - Serial Number 74
Vol. 19, No. 3, Autumn 2022 (Serial number 74)
December 2022
Pages 181-217
Files
History
  • Receive Date: 17 March 2020
  • Revise Date: 13 February 2021
  • Accept Date: 19 February 2021
Share
How to cite
Statistics