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Rent-seeking

This topic sheds some light on why there are around the world such pervasive pressures for inefficiency, for failing to minimize costs.

The term rent-seeking was first introduced by a then young economist, Professor Ann Krueger. The phrase has become a part of the daily vocabulary of economics.

There has been long concern with rent-seeking across cultures. An example from Spanish literature would be Los Interes Creados (“The Special Interests”).

The Invisible Foot contrast with the “Invisible Hand”

Professor Krueger had a long-held concern about costs of rent-seeking. Three decades ago, she made an extremely useful contribution based on her work in U.S. and in Turkey. She integrated elements of international trade theory with the economic theory of bureaucracy and the systematic study of economic policy-making. The result was a seminal article called “The Political Economy of the Rent-Seeking Society.” It is assigned reading.

This contribution changed the way economists look at the workings of government, at influence-peddling, corruption and just ordinary bureaucratic ineffectiveness. It gave us a systematic way of studying issues related to corruption rather than relying on anecdotes.

Her framework, in the hands of later scholars, has enhanced our understanding of determinants of resource allocation and income distribution. We will see that rent-seeking behavior has implications that are rarely positive either for efficiency or equity, except by accident. Her framework deals with efforts by government officials, lobbyists, traders, and managers to secure favorable treatment from government officials. These favors result in “rents,” which go to the wealthiest, thereby worsening income distribution.

The theory shows how rent-seeking activities divert energies and resources from productive activities, thereby stunting economic growth and skewing the rewards from economic activity. Rent-seeking is thus a corrosive activity in any economy.

That is to say, successful rent-seeking activities have been one of the major factors accounting for maldistribution of income. This was long true, especially in Latin America.

The rent-seeking framework is also useful for analysis problems in the U.S., Canada and Europe. Is really useful for looking at 21 st century Russia, the “Kleptocratic society.”

Estimated losses for rent-seeking behavior in U.S. – 3% of GDP.

Effects of rent-seeking behavior are almost always very corrosive to economies and societies. When rent-seeking behavior interacts with structural problem of an economy, such as overdependence on oil revenue (Nigeria), the results can be spectacularly toxic.

In Turkey for example, there was an import-licensing system in seventies. Import licenses awarded to political favorites . It cost 15% of GNP.

To understand the consequences of rent-seeking behavior, you need to understand what is meant by the term “rent” in economics. We noted earlier that it has several meanings. Let us investigate. Distinguish always between “ natural rents” and artificial “ unnatural rents.”

Questions & Answers

can someone help me with some logarithmic and exponential equations.
Jeffrey Reply
sure. what is your question?
ninjadapaul
20/(×-6^2)
Salomon
okay, so you have 6 raised to the power of 2. what is that part of your answer
ninjadapaul
I don't understand what the A with approx sign and the boxed x mean
ninjadapaul
it think it's written 20/(X-6)^2 so it's 20 divided by X-6 squared
Salomon
I'm not sure why it wrote it the other way
Salomon
I got X =-6
Salomon
ok. so take the square root of both sides, now you have plus or minus the square root of 20= x-6
ninjadapaul
oops. ignore that.
ninjadapaul
so you not have an equal sign anywhere in the original equation?
ninjadapaul
Commplementary angles
Idrissa Reply
hello
Sherica
im all ears I need to learn
Sherica
right! what he said ⤴⤴⤴
Tamia
what is a good calculator for all algebra; would a Casio fx 260 work with all algebra equations? please name the cheapest, thanks.
Kevin Reply
a perfect square v²+2v+_
Dearan Reply
kkk nice
Abdirahman Reply
algebra 2 Inequalities:If equation 2 = 0 it is an open set?
Kim Reply
or infinite solutions?
Kim
The answer is neither. The function, 2 = 0 cannot exist. Hence, the function is undefined.
Al
y=10×
Embra Reply
if |A| not equal to 0 and order of A is n prove that adj (adj A = |A|
Nancy Reply
rolling four fair dice and getting an even number an all four dice
ramon Reply
Kristine 2*2*2=8
Bridget Reply
Differences Between Laspeyres and Paasche Indices
Emedobi Reply
No. 7x -4y is simplified from 4x + (3y + 3x) -7y
Mary Reply
is it 3×y ?
Joan Reply
J, combine like terms 7x-4y
Bridget Reply
im not good at math so would this help me
Rachael Reply
yes
Asali
I'm not good at math so would you help me
Samantha
what is the problem that i will help you to self with?
Asali
how do you translate this in Algebraic Expressions
linda Reply
Need to simplify the expresin. 3/7 (x+y)-1/7 (x-1)=
Crystal Reply
. After 3 months on a diet, Lisa had lost 12% of her original weight. She lost 21 pounds. What was Lisa's original weight?
Chris Reply
what's the easiest and fastest way to the synthesize AgNP?
Damian Reply
China
Cied
types of nano material
abeetha Reply
I start with an easy one. carbon nanotubes woven into a long filament like a string
Porter
many many of nanotubes
Porter
what is the k.e before it land
Yasmin
what is the function of carbon nanotubes?
Cesar
what is nanomaterials​ and their applications of sensors.
Ramkumar Reply
what is nano technology
Sravani Reply
what is system testing?
AMJAD
preparation of nanomaterial
Victor Reply
Yes, Nanotechnology has a very fast field of applications and their is always something new to do with it...
Himanshu Reply
good afternoon madam
AMJAD
what is system testing
AMJAD
what is the application of nanotechnology?
Stotaw
In this morden time nanotechnology used in many field . 1-Electronics-manufacturad IC ,RAM,MRAM,solar panel etc 2-Helth and Medical-Nanomedicine,Drug Dilivery for cancer treatment etc 3- Atomobile -MEMS, Coating on car etc. and may other field for details you can check at Google
Azam
anybody can imagine what will be happen after 100 years from now in nano tech world
Prasenjit
after 100 year this will be not nanotechnology maybe this technology name will be change . maybe aftet 100 year . we work on electron lable practically about its properties and behaviour by the different instruments
Azam
name doesn't matter , whatever it will be change... I'm taking about effect on circumstances of the microscopic world
Prasenjit
how hard could it be to apply nanotechnology against viral infections such HIV or Ebola?
Damian
silver nanoparticles could handle the job?
Damian
not now but maybe in future only AgNP maybe any other nanomaterials
Azam
can nanotechnology change the direction of the face of the world
Prasenjit Reply
At high concentrations (>0.01 M), the relation between absorptivity coefficient and absorbance is no longer linear. This is due to the electrostatic interactions between the quantum dots in close proximity. If the concentration of the solution is high, another effect that is seen is the scattering of light from the large number of quantum dots. This assumption only works at low concentrations of the analyte. Presence of stray light.
Ali Reply
the Beer law works very well for dilute solutions but fails for very high concentrations. why?
bamidele Reply
how did you get the value of 2000N.What calculations are needed to arrive at it
Smarajit Reply
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Source:  OpenStax, Economic development for the 21st century. OpenStax CNX. Jun 05, 2015 Download for free at http://legacy.cnx.org/content/col11747/1.12
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