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Regional policy and rent seeking : targeted versus broad based policies

Bjorvatn, Kjetil; Coniglio, Nicola D.
Working paper
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URI
http://hdl.handle.net/11250/162682
Date
2005-04
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  • Discussion papers (SAM) [604]
Abstract
Policies aimed at promoting regional development have often had

disappointing results. The present paper offers an explanation for why

such policies may fail, and, more importantly, analyses how policies

may be designed to create regional growth. Our main argument is

that broad based policies should be chosen in regions with weak institutions.

In regions with stronger institutions, policies targeted at

promoting investment in specific firms or industries may be more efficient.

The basis for this policy recommendation is the hypothesis that

in countries with weak institutions, targeted policies create rents that

attract rent seekers. Broad based policies, on the other hand, create a

balanced process of industrialization, which reduces the scope for rent seeking.
Publisher
Norwegian School of Economics and Business Administration. Department of Economics
Series
Discussion paper
2005:7

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