Pampered Bureaucracy and Trade Liberalization

Caleb Stroup and Benjamin Zissimos

No 1004, Vanderbilt University Department of Economics Working Papers from Vanderbilt University Department of Economics

Abstract: This paper shows how a nation's elite maintain ownership of their wealth by creating a `pampered bureaucracy.' The elite thus divert part of an otherwise entrepreneurial middle class from more productive manufacturing activities, reducing economic efficiency. Trade liberalization is potentially destabilizing since it lowers the opportunity cost to the lower classes of challenging the elite for their wealth. If trade liberalization does take place, it may mandate expansion of the pampered bureaucracy. Therefore, trade liberalization may actually reduce economic efficiency. The econometric results support our model and contribute to the literature on trade liberalization and the size of government.

Keywords: Bureaucracy; efficiency; inefficient institutions; social conflict; trade liberalization (search for similar items in EconPapers)
JEL-codes: D30 D73 D74 F10 F15 (search for similar items in EconPapers)
Date: 2010-04
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Persistent link: https://EconPapers.repec.org/RePEc:van:wpaper:1004

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