Mattera05.doc - Guilt by Association Exploring the Effects of Business Association Activity on Economic Growth Gabriel Mattera Faculty Advisor Professor

Mattera05.doc - Guilt by Association Exploring the Effects...

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Guilt by Association? Exploring the Effects of Business Association Activity on Economic Growth Gabriel Mattera Faculty Advisor: Professor Sami Alpanda Submitted to the Department of Economics at Amherst College in partial fulfillment of the requirements for the degree of Bachelor of Arts with Distinction April 22, 2005
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Acknowledgments First and foremost among those to whom I owe a great debt is my advisor, Professor Sami Alpanda. As fellow neophytes, he to the process of thesis advising, I to the process of thesis writing, I like to think that we both had something to teach the other. Unfortunately, I know that this is simply not true. The theoretical insights, econometric understanding and general guidance he bestowed upon me vastly outweigh anything I could hope to offer in return. I wish to thank him especially for his patience across many weekly meetings, and for his tolerance of my proclivity towards independent action. The greatest teachers, I like to think, are those that lead their students to discover things on their own. I would also like to sincerely thank Ashfaq Qadri for his honest and straightforward comments on early drafts of the manuscript. It is truly a noble friend who willingly offers to take time out of his busy day to read tens of pages of dry undergraduate economics. Zeina Nasr deserves special mention. Without her anxious reminders of the impending April deadline, I would never have become nervous enough to do the intense work necessary to finish this project in a timely manner. Thanks goes also to Ngoc Trang, whose conversation and joking in the Economics Computer Laboratory was a burst of fresh air during the writing process. Finally, I must acknowledge both of my parents. Throughout my life they have constantly stressed the value of a full education and the pleasures of a curious mind. Without their influence and support I would not be at Amherst College. ii
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INTRODUCTION Business associations are a natural phenomenon in modern, democratic states. In so far as firms and individuals can benefit from sharing professional experience with each other, or from uniting to pursue a common economic aim, it stands to reason that businesses will always have an interest in joining together. The issue, though, is how this activity affects overall social welfare. Many other private interest organizations pose a similar question. What partly distinguishes business associations from these others is that they are a fluid and varied category, representing a range of groups including, but not limited to, local professional clubs, national business federations, and on a grander scale the lobbying wings of multinational corporations. In part because of this, while interest groups as a whole have been examined at length, there have been few attempts to isolate the effects of business associations from the greater aggregation of private organizations. The goal of this paper is precisely to do that. More specifically, it seeks to find whether or not business associations can have a positive influence on social welfare.
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