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Rent-seeking government and endogenous takeoff in a Schumpeterian economy

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  • Chu, Angus C.
  • Furukawa, Yuichi
  • Wang, Xilin

Abstract

This study explores how the rent-seeking behavior of the government may impede economic development and delay industrialization. Introducing a rent-seeking government to a Schumpeterian growth model that features endogenous takeoff, we find that a more self-interested government engages in more rent-seeking taxation, which delays the economy’s transition from pre-industrial stagnation to modern economic growth. Quantitatively, a completely self-interested government could have delayed industrialization, relative to a benevolent government, by about two centuries in the UK.

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  • Chu, Angus C. & Furukawa, Yuichi & Wang, Xilin, 2022. "Rent-seeking government and endogenous takeoff in a Schumpeterian economy," Journal of Macroeconomics, Elsevier, vol. 72(C).
    • Handle: RePEc:eee:jmacro:v:72:y:2022:i:c:s0164070422000039
    DOI: 10.1016/j.jmacro.2022.103399
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    Cited by:

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    3. Chu, Angus & Cozzi, Guido & Fan, Haichao, 2022. "Natural Selection and Innovation-Driven Growth," MPRA Paper 113502, University Library of Munich, Germany.

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    More about this item

    Keywords

    Rent-seeking government; Endogenous takeoff; Industrialization;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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