Rent Preservation and the Persistence of Underdevelopment

Raghuram Rajan

American Economic Journal: Macroeconomics, 2009, vol. 1, issue 1, 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)

JEL-codes: D72 O10 O17 (search for similar items in EconPapers)
Date: 2009
Note: DOI: 10.1257/mac.1.1.178
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Citations: View citations in EconPapers (36)

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Working Paper: Rent Preservation and the Persistence of Underdevelopment (2006)
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