Parasites

Halvor Mehlum (), Karl Ove Moene () and Ragnar Torvik ()

Development and Comp Systems from EconWPA

Abstract: Unproductive enterprises that feed on productive businesses, are rampant in developing countries. A consequence of parasitic enterprises is that societies may be locked into a self enforcing configuration of beliefs and practices that result in persistent poverty. When entrepreneurs of both productive and parasitic enterprises are drawn from the same limited pool of entrepreneurs, the rise of parasitic profit opportunities may cause economic stagnation and underdevelopment that in turn enhance the profitability of parasitic enterprises relative to productive enterprises. Thus parasitic rent appropriation may induce stagnation, while stagnation may induce parasitic activities. Together the two links can lead developing economies into a poverty trap.

Keywords: Parasitic activities; rent seeking; strategig complimentarities (search for similar items in EconPapers)
JEL-codes: O P (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ent and nep-hpe
Date: 2004-06-05
Note: Type of Document - pdf; pages: 20
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpdc:0406003

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