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Institutional Underdevelopments As The Obstacle To The Economic Growth: Rent Seeking Society In Serbia

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  • Aleksandra Prascevic

Abstract

The paper deals with the rent seeking preferences of the economic policymakers in Serbia which define their opportunistic motives in economic policymaking. Bearing in mind that, in broadest sense, rent seeking concept implies actions of individuals or interest groups on changing the public policy so that the income would directly or indirectly be distributed to their benefit, this in macroeconomics gives politicians the opportunity to collect rents for themselves or their close associates, using primarily the fiscal policy. Depending on conditions and characteristics present in an economy, rents can occur in different forms, such as salaries and other types of incomes of state officials or funds used for financing political parties. Since the process of rent seeking involves using political process, by individuals or groups, for the purpose of obtaining a share of other people's wealth, the motivation for rent seeking is directly related to the easiness with which the political process can be used for making profit on other people's account. Simultaneously, rent seeking is also influenced by general social and economic terms of existing corruption and monopole privileges, which provide the politicians with vast opportunities to obtain different forms of rent. Exactly these characteristics are present in Serbia and for this reason the incumbents' in Serbia can be considered "rent seeking" politicians; they are interested not only in winning the elections, but in getting tangible rents for themselves when they are reelected and when they can exploit their political power. It is possible to notice certain significant episodes in the pre-electoral use of economic policy in Serbia since 2000. Elements of political motives can even be observed in the model of economic growth that has been applied, which has been based on the aggregate demand, and on one of its components - domestic demand. The socio - economic conditions in Serbia, including underdevelopment of the institutions that enable rent seeking activities are the key obstacle for the achieved economic growth.

Suggested Citation

  • Aleksandra Prascevic, 2012. "Institutional Underdevelopments As The Obstacle To The Economic Growth: Rent Seeking Society In Serbia," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 8(2), pages 319-333.
    • Handle: RePEc:mje:mjejnl:v:8:y:2012:i:2:p:319-333
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