American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Rent Preservation and the Persistence of Underdevelopment
American Economic Journal: Macroeconomics
(pp. 178–218)
Abstract
When citizens in a poor constrained society are unequally endowed, they are likely to find it hard to agree on reforms, even though the status quo hurts them collectively. Each citizen group or constituency prefers reforms that expand its opportunities, but in an unequal society, this will typically hurt another constituency's rents. Competitive rent preservation ensures no comprehensive reform path may command broad support. The roots of underdevelopment may therefore lie in the natural tendency toward rent preservation in a divided society. (JEL D72, O10, O17)Citation
Rajan, Raghuram G. 2009. "Rent Preservation and the Persistence of Underdevelopment." American Economic Journal: Macroeconomics 1 (1): 178–218. DOI: 10.1257/mac.1.1.178Additional Materials
JEL Classification
- D72 Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
- O10 Economic Development: General
- O17 Formal and Informal Sectors; Shadow Economy; Institutional Arrangements