TY  - JOUR
AU  - Rajan,Raghuram G.
TI  - Competitive Rent Preservation, Reform Paralysis, and the Persistence of Underdevelopment
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12093
PY  - 2006
Y2  - March 2006
UR  - http://www.nber.org/papers/w12093
L1  - http://www.nber.org/papers/w12093.pdf
N1  - Author contact info:
Raghuram Rajan
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-4437
Fax: 773/702-0458
E-Mail: raghuram.rajan@ChicagoBooth.edu
AB  - Initial inequality in endowments and opportunities, together with low average levels of endowments, can create constituencies in a society that combine to paralyze reforms, even though the status quo hurts them collectively. Each constituency prefers reforms that expand its opportunities, but in an unequal society, this will typically hurt another constituency’s rents. Competitive rent preservation ensures no comprehensive reform path may command broad support. Though the initial conditions may well be a legacy of the colonial past, persistence does not require the presence of coercive political institutions, perhaps one reason why underdevelopment has survived independence and democratization. Instead, the roots of underdevelopment may lie in the natural tendency towards rent preservation in a divided society.
ER  -