democracy creeping socialism and ideological socialism in rent seeking societies rent seeking societies suffer from a serious distortion of incentives incentives to engage in distributional struggles to seek contrived transfers are strong but incentives to engage in productive work are too weak stagnation and some unemployment should be expected long lasting democracies within unchanged borders create a permissive environment for rent seeking the provision of rents very much depends on government the stronger the governmental involvement in the economy the higher social security spending the more rents the government is likely to generate therefore creeping socialism understood as increased government control of the economy should reinforce the rent seeking society and the corresponding negative effects on growth and employment whether such creeping socialism is backed by ideological socialism or not should make little difference for growth or employment these ideas have been tested and partially supported by a 19 nation sample of industrial democracies using data from the sixties and seventies by and large the rent seeking approach is fairly successful in explaining national differences in economic growth rates but receives ambiguous support or less for unemployment olson s 1982 1983 proposition about the negative impact of long lasting democracy within unchanged borders on economic growth is much better supported than the growth retarding effects of government revenues or social security spending are

interest groups and the rise and decline of growth interest groups are known to exert a sclerotic impact on mean growth a la olson 1982 it is unknown however what impact if any groups exert on the volatility of growth an important hindrance to development in this article we first consider what impact we should expect olson groups to have on the volatility of growth we then estimate the relation between groups and growth volatility in a cross country panel using system generalized method of moments the findings indicate that groups are associated with growth stability in addition the findings suggest that interest groups may be a source of the stability observed in democracies

the origins and development of the northeast asian political economy industrial sectors product cycles and political consequences theories of the product cycle hegemony and the world system are used to analyze the creation and development of the northeast asian political economy in this century japan south korea and taiwan have each developed in a particular relationship with the others the three taken together form a hierarchical constantly interacting political economic unit during the period of colonial rule japan was unique in building an imperial economic unit marked by a strong role for the state whether in tokyo or taipei by a tight integral unking of all three nations into a communications and transport network running toward the metropole and by a strategy of both using the colonies for agricultural surpluses and then locating industries there after 1945 a diffuse american hegemony replaced japan s unilateral system but elements of the prewar model have survived strong states direct economic development in south korea and taiwan here termed bureaucratic authoritarian industrializing regimes both countries are receptacles for japan s declining industries and both countries develop in tandem if in competition with each other the most recent export led competition has seen taiwan succeed where south korea has temporarily failed leaving seoul in an export led trap burdened with rapidly increasing external debt taiwan furthermore has industrialized relatively free of social disruption whereas korean society resisted its transformation at japanese hands and remains more rebellious today there can be one japan and one taiwan but not two or many of either in the world economy

interest groups and economic performance some new evidence mancur olson s theory of the decline of nations is path breaking in political economics it has been tested cross sectionally in numerous empirical studies we survey the existing results briefly with a special focus on studies using the number of lobbies as an exogenous variable using data from the period 1973 2006 we then present the field s first time series analysis of the effects of the number of interest groups on the german lobby list and macroeconomic performance gauged in terms of economic growth and inflation the number of interest groups as a proxy for their influence is shown to have an important impact on macro variables interest group activity significantly leads to a decline in the growth rate and a rise in the inflation rate

distributional coalitions and other sources of economic stagnation on olson s rise and decline of nations one of the most important recent contributions to the field of comparative political economy is mancur olson s the rise and decline of nations in that work olson deduces from his logic of collective action a series of implications regarding the impact of social organizations in particular distributional coalitions on economic growth that can explain variations in national growth rates across a wide range of time and space this article considers the assumptions upon which that logic is founded the plausibility of the several implications drawn from that logic and the application of the theory to account for differences among five nations in rates of economic growth in the post world war ii era the analysis suggests that the characteristics of group activity emphasized by olson represent at best only a small perhaps negligible part of the explanation of cross national differences in growth instead it suggests that an important source of the variation among nations in growth rates is the international political and economic system in particular the discussion of the german japanese and british cases suggests that stagnation or growth is to a considerable extent the product of a nation s position in the world economy the policy responses through which governments seek to perpetuate or improve that position and the constraints upon or opportunities for growth oriented domestic economic policy posed by that position

nietzschean development failures government policies and substantial external resources and technical assistanceprovided over the course of decades have neither eliminated broad poverty nor resulted inequitable income distributions in the poorer countries of the world this paper explains thedevelopment failures with reference to nietzschean behavior where the strong act withoutethical restraint and the rule of law does not protect the weak while nietzschean behaviorviolates principles of social justice there are also inefficiencies the nietzschean strong whorule have no incentive to adopt efficiency enhancing policies efficiency in a nietzscheansociety is also greater the higher the leisure preference of the weak and the less the weakare capable of producing labor productivity is low because the weak do not consistentlywork these are the outcomes when the strong behave as roving bandits when the strongbehave as stationary bandits efficiency is enhanced but income distribution can be expectedto remain unequal the nietzschean perspective on development failure is compared withalternative explanations for the sustained plight of the poor in poor countries and the unequaldistributions of income and wealth

testing the implications of the olson hypothesis considerable attention has been paid to the hypothesis advanced by olson that accumulations of interest groups build up over time and retard economic performance most previous tests of this hypothesis have been based on comparisons of growth rates in this paper it is argued that comparisons of income levels yield a superior test strong forms of the olson hypothesis in which shocks such as revolution and war yield positive benefits are rejected using this test

determinants of interest group formation it is widely recognized that interest groups affect both microeconomic and macroeconomic outcomes however few researchers have attempted to discern empirically the factors that contribute to interest group activity this paper provides a test of several theories of group formation in a panel setting a nation s stability socioeconomic development political system size and diversity all appear to contribute to interest group formation as predicted by theory

rent seeking distributional coalitions taxes relative prices and economic growth the results clearly indicate that much of the considerable variation in the pace and pattern of economic growth between the various american states is explainable by institutional arrangements amenable to revisions through public policy the findings suggest that long run economic growth would be best served by constraining distributional coalitions be it through constitutional restraints e g balanced budget amendments the item veto statutory changes e g subjecting coalitions like labor unions to the antitrust laws or some other means e g labor and capital fleeing distributional coalitions such as in the movement of workers and plants to nonunion areas

distributional coalitions state strength and economic growth toward a comprehensive theory of economic development high performing economies in the asia pacific region together with only mediocre economic development in latin america prompts the question of what explains differential economic growth rates among developing countries combining a statist perspective with olson s theory of interest group formation this research hypothesizes that nations with weak distributional coalitions will more likely experience high growth and state intervention will be effective using a longitudinal research design this secondary analysis involves a comparative and interactive examination of eight asian pacific and twelve latin american countries by considering the role of the state in interaction with distributional coalitions in society the results indicate that approximately two thirds of the variance in national economic growth is explained

optimal pricing of depletable replaceable resources the case of landfill tipping fees abstract we develop a general model for pricing a depletable replaceable asset and discuss its application in determining optimal tipping fees for a sanitary landfill we show that the optimal fee includes a component that grows at the real interest rate as space in the landfill is depleted and then drops when a new landfill is built because the scarcity cost of landfill space increases as the landfill is filled it may be optimal to delay a waste reduction program such as recycling composting or incineration until the landfill is partially full

government special interest groups and economic growth in descending order of robustness and strength the four major conclusions are i the experience of industrial countries in the postwar period indicates that a large welfare state has been associated with a high rate of economic growth ii the olson thesis that powerful special interest groups impede growth receives empirical support iii the relation between growth and the welfare state is non linear with increases in the size of the welfare state beyond some critical level one sixth of gdp according to our estimates resulting in reductions rather than increases in the growth rates and iv the strength of the growth promoting properties of the welfare state is positively related to the strength of special interest groups as proxied by the proportion of the work force unionized one possible interpretation of these results runs as follows a large welfare state may retard economic growth by reducing the incentives to work to save to move and to change on the other hand in a situation where special interest groups have aquired significant power to block change if they so desire the welfare state which offers assistance to those who are the victims of change may play a growth enhancing role in reducing the incentive to block change the fourth conclusion just stated supports this view the welfare state may also foster economic growth through favourable effects on social consensus political stability and labour management relations the results suggest that the growth promoting forces predominate as long as the welfare state is not too large but beyond a certain point which corresponds more or less to the median situation among developed countries today the growth retarding elements come to the fore

determinants of the increase in the number of interest groups in western democracies theoretical considerations and evidence from 21 oecd countries mancur olson s theory of institutionalsclerosis is based on the notion that thenumber of interest groups within a countryincreases with the duration of itspolitical stability the following paperargues that the increase in the number ofinterest groups over time could also be aconcomitant of economic development theoretically both explanations provetenable an empirical cross sectionalregression analysis using data from 21oecd countries finds no evidence for asignificant impact of the duration ofpolitical stability on the number ofinterest groups a significantly positiveeffect is however reported for the degreeof economic development

landfill construction and capacity expansion we study the optimal capacity and lifetime of landfills taking into account their sequential nature such an optimal capacity is characterized by the so called optimal capacity condition particular versions of this condition are obtained for two alternative settings first if all the landfills are to have the same capacity and second if each of them is allowed to have a different capacity in the second case we obtain an optimal control problem with mixed elements of both continuous and discrete time the resulting optimization problems involve dividing a time horizon of planning into several subintervals of endogenously decided length the results obtained may be useful to address other economic problems such as private and public investments consumption decisions on durable goods etc

the rise and decline of nations economic growth stagflation and social rigidities the years since world war ii have seen rapid shifts in the relative positions of different countries and regions leading political economist mancur olson offers a new and compelling theory to explain these shifts in fortune and then tests his theory against evidence from many periods of history and many parts of the world

explaining differences in state growth catching up versus olson in this paper we have tested various explanations for differences in rates of economic growth across states we found no evidence consistent with olson s hypothesis that differences in state age a proxy for the strength of special interest groups can explain differences in state growth furthermore our results indicate that a regression containing only initial income explains most of the variation in the growth of state income in sum a good part of the more rapid growth of southern and other fast growing states is simply a convergence to the national average this convergence is an expected result of basic economic theory given free trade in goods and factors our results are however not necessarily a rejection of the olson hypothesis it may well be that the hypothesis should only be applied to comparisons between nation states not to comparisons between political divisions of the same nation state the institutional and political similarities of the american states may swamp the differences and make the olson hypothesis inapplicable the tendencies cited by olson may indeed be present in the american economy but their differential effect is much too small to explain any of the variation in economic performance across states

special interest groups and growth this paper explores empirically the relation between special interest groups and economic growth our analysis exploits new data on the number of groups observed across countries and time in order to mitigate the identification problems associated with earlier studies also in contrast to earlier work we examine the impact of groups on two sources of growth capital accumulation and technological change in addition to the impact of groups on output growth the findings are consistent with olson s the rise and decline of nations the political economy of economic growth stagflation and social rigidities new haven yale 1982 claim that societies with greater numbers of interest groups grow slower accumulate less capital and experience reduced productivity growth relative to others

intertemporal depletion of resource sites by spatially distributed users mineral deposits and other exhaustible resources are scattered around the globe as are their users yet the theory for analyzing depletion of such resources assumes that all resource sites and all users are located in the same place when applying the theory therefore one is forced to disregard what often seems to be an important real world consideration our purpose here is to generalize harold hotelling s 1931 theory of exhaustible resources to accommodate situations in which resource sites and their users are spatially distributed our analysis has many applications it can be applied to a conventional exhaustible resource like oil alternatively it can be applied to an unconventional exhaustible resource like scarce landfill space shipments of solid waste to landfills in other states or countries have become a prominent public policy issue eduardo ley et al 2000 finally our analysis can be applied in situations where the space reflects not geographical location but characteristics of the resource e g the sulfur content hardness and so forth of coal which users find distinctive 2 only two theoretical papers in resource economics have introduced spatial considerations 3 jean jacques laffont and michel moreaux 1986 studied the extraction of resources from sites located along a line segment with all users at one end charles kolstad 1994 was the first to consider spatially distributed users in his formulation consumers are distributed uniformly along a line segment with resource sites at each end kolstad s approach although innovative requires that the set of users be parti

democracy political stability and economic growth in developing countries some evidence on olson s theory of distributional coalitions mancur olson has theorized recently that interest groups and distributional coalitions are a major factor in the rise and decline of nations he argues that the tendencies of these organizations to multiply and to support distributive policies lead to economic and political stalemate particularly in the most stable democratic societies in which pluralism has its greatest scope the bulk of evidence for olson s theory comes from the industrialized world in this article i test three of its propositions against the experience of seven stable liberal democracies in the developing world the theory predicts that with time such societies will reduce investment for the sake of consumption will expand their public sectors and will grow slowly in economic terms economic trends in the sample countries fail to confirm the first two propositions but offer tentative support for the third

interest group politics and economic growth in the u s states mancur olson s model of economic growth has attracted great attention as a theoretical account of how interest groups influence the rate of economic growth over time moreover the model appears to have received strong empirical support in olson s tests employing u s state data however the specification of the olson construct in these tests is insufficiently attentive to the complex causal chain implicit in olson s argument inadequately accounts for precisely how interest groups matter and employs a static research design that obfuscates the cause and effect relationships posited by the model we review these issues and develop a more complete specification of the olson model the respecified model is then tested using u s state data for the period of the late 1970s and early 1980s using new measures of interest group influence

explaining the rain the rise and decline of nations after 25 years in the quarter century since the publication of mancur olson s rise and decline of nations a large literature has evolved testing the central hypothesis regarding olson s thesis on institutional sclerosis these tests have taken the form of both econometric regression analysis involving a sample of various nations and detailed narrative case studies of specific nations tests have appeared in both economics and political science journals as well as in collected volumes and independent books performed primarily by authors from america and europe a review of over 50 separate works reveals that on the whole the theory of institutional sclerosis is generally but certainly not universally supported no systematic bias in favor of or opposition to olson is found to have arisen on the basis of methodology publication outlet or authorship location