What effects on economic efficiency

Defining developmental state a concept justaposed

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Unformatted text preview: ist? Cronies = those with political influence who receive benefits that have economic value As mentioned earlier, any government strong enough to protect property rights is also strong enough to confiscate wealth Best solution = credible commitment to limit expropriation of wealth But cronyism is a second- best option Under crony capitalism, members of the government and members of the private sector share in rent seeking Private sector elites enjoy economic privileges Any attempt by the government to reduce these rents will affect indivudals within government (or their families) Suharto, INC. The extreme case: the predatory state Gecamines mining co, Congo Founded in 1960, nationalized in 1966 Directors appointed were political allies of president Mobuto Rent extraction: Zairean central bank began depositing money from export and forward sales into presidential bank accounts Supply contracts offered to political allies at inflated prices In 1993, company stopped paying taxes without consequence...
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This document was uploaded on 03/28/2014 for the course INAF 252 at Georgetown.

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