What effects on economic efficiency

The extreme case the predatory state gecamines mining

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Unformatted text preview: The concept of “state capture” was introduced to distinguish Corruption at the level of policy implementation vs. formulation Latter is usually legal Think of a company hat has a choice between engaging in productive activity (and innovation) vs. fostering “political connection” The latter can allow firms to advie on the drafting of laws and regulations that affect their business Monopoly licenses Tax breaks Subsidies Protections In this case, rent seeking becomes “rent setting” creating a permanent stream of rents. Cronyism is bad for non- influential firms Cronyism and influence: State capture = when private parties control legislative or judicial processes Russian oligarchs Carlos Slim (world’s 3rd richest person) Monopoly rights on Telemex when they were privatized Many east Asian corporate families Plenty of other examples (even in richer countries!) What do politicians get in return? (HABER ARTICLE ON LATIN AMERICAN CRONYISM) Money (perhaps) Critical “partners’ in the private sector who can employ lots of workers, invest in preferred sectors, provide other politically valuable benefits Why does crony capitalism pers...
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