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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

what is variations in raman spectra for nanomaterials
Jyoti Reply
I only see partial conversation and what's the question here!
Crow Reply
what about nanotechnology for water purification
RAW Reply
please someone correct me if I'm wrong but I think one can use nanoparticles, specially silver nanoparticles for water treatment.
yes that's correct
I think
what is the stm
Brian Reply
is there industrial application of fullrenes. What is the method to prepare fullrene on large scale.?
industrial application...? mmm I think on the medical side as drug carrier, but you should go deeper on your research, I may be wrong
How we are making nano material?
what is a peer
What is meant by 'nano scale'?
What is STMs full form?
scanning tunneling microscope
how nano science is used for hydrophobicity
Do u think that Graphene and Fullrene fiber can be used to make Air Plane body structure the lightest and strongest. Rafiq
what is differents between GO and RGO?
what is simplest way to understand the applications of nano robots used to detect the cancer affected cell of human body.? How this robot is carried to required site of body cell.? what will be the carrier material and how can be detected that correct delivery of drug is done Rafiq
what is Nano technology ?
Bob Reply
write examples of Nano molecule?
The nanotechnology is as new science, to scale nanometric
nanotechnology is the study, desing, synthesis, manipulation and application of materials and functional systems through control of matter at nanoscale
Is there any normative that regulates the use of silver nanoparticles?
Damian Reply
what king of growth are you checking .?
What fields keep nano created devices from performing or assimulating ? Magnetic fields ? Are do they assimilate ?
Stoney Reply
why we need to study biomolecules, molecular biology in nanotechnology?
Adin Reply
yes I'm doing my masters in nanotechnology, we are being studying all these domains as well..
what school?
biomolecules are e building blocks of every organics and inorganic materials.
anyone know any internet site where one can find nanotechnology papers?
Damian Reply
sciencedirect big data base
Introduction about quantum dots in nanotechnology
Praveena Reply
what does nano mean?
Anassong Reply
nano basically means 10^(-9). nanometer is a unit to measure length.
do you think it's worthwhile in the long term to study the effects and possibilities of nanotechnology on viral treatment?
Damian Reply
absolutely yes
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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