The political economy of rent-seeking in Turkey

• Main Author: Demirbas, Dilek
• Published: University of Leicester 2000
• Subjects: 333.3
• Online Access: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.696807

This thesis explores, both theoretically and empirically, the political economy of rent-seeking in Turkey. Previously there have been few attempts to measure the extent of rent-seeking activities in Turkey, and they have often followed a rather narrow approach to handle such a large issue and have looked at only the normative side. In this study, our purpose is to apply a more comprehensive approach by including both normative and positive elements to examine the social and economic costs of rent-seeking, its main causes and its impact especially upon economic growth. In this way our contributions are to: i) look at rent-seeking descriptively and empirically from both normative and positive sides, ii) combine a state centred public choice approach to rent-seeking with recent time series econometric techniques, iii) offer a new approach, monism, for the analysis of the state-interest group relationship, and iv) test whether rent-seeking has an effect on economic growth in the long term. The thesis is divided into three sections. Normative rent-seeking is analysed in section I, positive rent-seeking is discussed in section II and the impact of rent-seeking on economic growth is considered in section III. Each section contains a literature review and an empirical investigation. In chapter 4, following a method suggested by Katz and Rosenberg, we analyse rent-seeking waste arising from government budgetary allocations and extend their cross section study for the same 20 countries from fifteen years to twenty five years. We found that Katz and Rosenberg's distinction between developed/developing countries still exists and rent-seeking in developing countries (like Turkey) is much greater than in developed countries. Then, in chapter 6, we look at the causes of rent-seeking by building a model that includes both demand for and supply of trade legislation for the period 1960-1990 in Turkey. We found that the reason for high rent-seeking in Turkey is hidden in the lobbying activities between legislators and business groups. In that equilibrium, whilst legislators are brokers to maximise their salaries and their budget size, business groups demand legislation to maximise their profit. Finally, in chapter 8, we investigate whether rent-seeking has a negative impact on economic growth. We found that, rent-seeking activities in Turkey reduced economic growth and lower income levels between 1960 and 1990.