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Destructive competition : factionalism and rent-seeking in Iran

Selvik, Kjetil; Bjorvatn, Kjetil
Working paper
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URI
http://hdl.handle.net/11250/163314
Date
2007-02
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  • Discussion papers (SAM) [608]
Abstract
Empirical evidence shows that countries richly endowed with natural

resources like oil and gas tend to have slower economic growth

than resource poor countries. The present paper focuses on rentseeking

as a source of the “resource curse”, using Iran as a case in

point. Iran is an interesting case, both because it is a rentier economy

in the oil rich Middle East, and because its political system is

highly factionalized. The distortions from the factionalized political

system are threefold. First, resources are wasted in the competition

for rents. Second, the lack of property rights protection results in less

(private) investment at the aggregate level. Third, imbalances in the

distribution of political power between groups lead to a distortion in the allocation of investment funds.
Publisher
Norwegian School of Economics and Business Administration. Department of Economics
Series
Discussion paper
2007:8

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