Rent Preservation and the Persistence of Underdevelopment

Raghuram Rajan

No 12093, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: When citizens in a poor constrained society are very 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 towards rent preservation in a divided society.

JEL-codes: I2 K0 O1 O15 P5 (search for similar items in EconPapers)
Date: 2006-03
New Economics Papers: this item is included in nep-dev, nep-edu, nep-law and nep-pol
Note: CF EFG LE
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Citations: View citations in EconPapers (17)

Published as Raghuram G. Rajan, 2009. "Rent Preservation and the Persistence of Underdevelopment," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(1), pages 178-218, January.

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Journal Article: Rent Preservation and the Persistence of Underdevelopment (2009)
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