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The quest for benefit from existing wealth or by seeking privileged benefit through influence over policy is known as rent seeking. Much rent seeking activity involves government and political decisions and is therefore in the domain of political economy, although it can also take place in personal relations and within firms and bureaucracies. Rent seeking, which involves the unproductive use of resources, is however primarily associated with policies that create rents as well as rent extraction or political benefit for the creators of rents. The contributions in this outstanding volume provid

Rent seeking.

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In many developing countries (and beyond), public sector workers are not just simply implementers of policies designed by the politicians in charge of supervising them-so called agents and principals, respectively. Public sector workers can have the power to influence whether politicians are elected, thereby influencing whether policies to improve service delivery are adopted and how they are implemented, if at all. This has implications for the quality of public services: if the main purpose of the relationship between politicians and public servants is not to deliver quality public services, but rather to share rents accruing from public office, then service delivery outcomes are likely to be poor. This paper reviews the consequences of such clientelism for improving service delivery, and examines efforts to break from this "bad" equilibrium, at the local and national levels.

Clientelism --- Governance --- National Governance --- Public Sector Development --- Public Sector Reform --- Rent Seeking --- Service Delivery

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This paper incorporates morality-defined as lower utility from consuming goods obtained through appropriative rather than productive activities-into a simple static general equilibrium model in which agents choose whether to be producers or appropriators. The authors analyze the relationship between the correlation between morality and human capital on the one hand, and aggregate economic performance on the other. They show that there is a main effect that tends to cause this relationship to be positive, and that there can be secondary effects that can either rein-force or oppose (or even overbalance) the main effect. They test the theory using the World Val-ues Survey as a source of proxies for morality. Using their preferred proxy, they find evidence that higher within-country correlation between morality and ability, holding constant the levels of morality and ability, increases per-capita income levels. Under the preferred specification, a one-standard-deviation increase in the correlation between morality and ability raises the log of per-capita income by about one-fourth of a standard deviation, equal to approximately USD 3,600 for the median income country in the sample. The results are robust to correcting for endogeneity and to changes in sample and specification. The results are mixed when the analysis uses alternative morality proxies, but the coefficient on the morality-ability correlation is still usually positive and statistically significant.

Appropriation --- Culture & Development --- Economic Development --- Economic Theory & Research --- Educational Sciences --- Ethics & Belief Systems --- Macroeconomics and Economic Growth --- Morality --- Rent-Seeking --- Statistical & Mathematical Sciences --- Teaching and Learning

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This study investigates the existence of political rents in bank lending, using a comprehensive loan-level data set of the universe of commercial loans in Mexico from 2003 to 2012. Identification relies on changes in the state of origin of a senate committee chairman as a source of exogenous variation in firms' political relationship. The study finds that banks offer favorable loan terms to politically connected firms with larger loan quantities, lower loan spreads, longer maturities, and lower collateral requirements. Furthermore, political loans exhibit higher default rates. To isolate the bank supply channel, a rich set of fixed-effects is included with various specifications. The favorable lending increases with the strength of a firm's political connection, varies gradually along the political cycle, and is mainly offered by large and domestic banks. Consistent with the quid pro quo hypothesis, the study finds that banks that extend political loans receive significantly more government borrowings with better credit quality. The study also shows that the greater credit supply due to political connection leads to a large and significant increase in firm-level employment and assets. The study provides estimates of the total social cost of political lending and net revenue for banks that are engaged in rent provision activity. Finally, a series of robustness tests are performed to rule out alternative mechanisms and explanations.

Access to Finance. --- Bank Lending. --- Bankruptcy and Resolution of Financial Distress. --- Banks and Banking Reform. --- Debt Markets. --- Finance and Financial Sector Development. --- Political Economy. --- Privatization. --- Rent Seeking.

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Economic schools --- AA / International- internationaal --- 338.011 --- Rentetheorie. Wet van de toenemende en afnemende rendementen. --- Rent (Economic theory) --- Economic rent --- Ground-rent --- Economics --- Land use --- Rent seeking --- Rentetheorie. Wet van de toenemende en afnemende rendementen