Rent-Seeking Activities, Misallocation, and Innovation in Argentina
What is the efficiency cost of rent-seeking activities in Argentina? This paper quantitatively shows that rent-seeking activities in the form of bribes have aggregate effects through two channels. First, they generate misallocation of resources acr...
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| Format: | Working Paper |
| Language: | English |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/820261592919425775/Rent-Seeking-Activities-Misallocation-and-Innovation-in-Argentina http://hdl.handle.net/10986/33988 |
| Summary: | What is the efficiency cost of
rent-seeking activities in Argentina? This paper
quantitatively shows that rent-seeking activities in the
form of bribes have aggregate effects through two channels.
First, they generate misallocation of resources across firms
because they prevent resources from flowing to the most
productive firms, reallocating resources instead to those
that succeed at rent-seeking. Second, such activities affect
the allocation of resources within firms because
rent-seeking drives resources away from innovation. These
two channels can help in understanding why Argentina has
more misallocation across firms and less investment in
research and development, compared with developed economies,
explaining a sizable portion of Argentina's low productivity. |
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