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The Political Economy of Investment: Sclerotic Effects from Interest Groups

Author

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  • Bonnie Wilson

    (Department of Economics, Saint Louis University)

  • Jac Heckelman

    (Department of Economics, Wake Forest University)

Abstract

We investigate the relationship between interest group activity and investment by analyzing an un- balanced panel of observations on 126 countries over three time-periods. We nd that the number of interest groups in a nation is negatively related to investment, consistent with a sclerotic e¤ect due to rent-seeking by interest groups. Our ndings are robust to the inclusion of a variety of additional common controls in the speci cation, to potential outlying observations, and to varied sample selection procedures. We do nd, however, that the sclerotic impact of groups on investment is stronger across developed OECD countries than for the developing non-OECD countries.

Suggested Citation

  • Bonnie Wilson & Jac Heckelman, 2010. "The Political Economy of Investment: Sclerotic Effects from Interest Groups," Working Papers 2012-03, Saint Louis University, Department of Economics.
    • Handle: RePEc:slu:wpaper:2012-03
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