Rent-seeking as Process

Khan, Mushtaq

doi:10.1017/cbo9781139085052.003

Cited by 154 publications

(89 citation statements)

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“…Similar problems exist in many Asian countries and regions and I have argued that this problem is deeper than one of political will. Some societies have very fragmented polities, and the extent and type of political fragmentation in Asia can improve our understanding of the differential performance within Asian countries (Khan 1996b(Khan , 1999(Khan , 2000a. Some of these ideas have been developed in the African context by Lockwood (2005).…”

Section: Specific Problems Attributed To Africamentioning

confidence: 99%

“…Success in each case depended on the country selecting economic instruments to correct market failures that it could actually enforce given its internal political settlement and institutional capabilities (Khan 2000a(Khan , 2006b). This is an important observation for many poorly performing countries, where overall governance capabilities are poorer and where it is therefore much more important to design interventions and governance reforms very carefully to achieve the maximum effect and to avoid failures that can easily happen if limited capacities are overstretched.…”

Section: Growth-promoting Governance Strategiesmentioning

confidence: 99%

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Governance and Growth Challenges for Africa

Khan¹

2011

Good Growth and Governance in AfricaRethinking Development Strategies

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The World Bank recognized the role of concerted state strategies in driving growth in a number of successful East Asian countries (World Bank 1993). However, this qualified recognition was attended with the observation that the appropriate state capacities for productive interventions were missing in most other developing countries. In these countries, attempts to replicate East Asian strategies would not only fail, but would make things worse due to static efficiency losses and rent-seeking costs. At one level, the World Bank's argument against growth-promoting strategies of the East Asian type in most developing countries is absolutely accurate. The appropriate governance capabilities are clearly absent in many of the poorest countries that are most in need of growth strategies. Moreover, an attempt to acquire state capabilities on a scale that would enable these countries to attempt the types of interventionist programmes seen in East Asian countries in the 1960s and 1970s is probably beyond the feasible capacity of reform in these developing countries.However, while we recognize the obvious truth in the World Bank's analysis of the problem, their policy conclusion does not necessarily follow. The conclusion was that because the substantial growth-promoting governance capabilities of the East Asian economies did not exist in most other developing countries (and indeed could not be feasibly replicated) their optimal strategy was to abandon all growth-promoting strategies and resort to the alternative of seeking to promote market efficiency through market-enhancing governance. This does not follow because a market-enhancing governance strategy is equally over-ambitious in the demands it makes on state capabilities and focusing on this may not deliver any significant returns. To attempt to make markets in general work so efficiently that market failures are no longer a problem may be just as overambitious as the attempt to correct vast swathes of market failures through extensive interventions. In addition, there are structural reasons which set a ceiling to the development of market-enhancing governance capabilities in developing countries. Focusing purely on market-enhancing governance is therefore likely to yield disappointing results.To take account of the limited reform capabilities in real contexts, a targeted approach to developing governance capabilities makes sense. The experience of successful developers suggests that growth-promoting governance was important, but many of the political and institutional initial conditions enjoyed by the successful countries of East Asia were indeed very different from those in Africa. Any simplistic attempt to learn the lessons of East Asia is therefore likely to be misleading because the scale of these growth-enhancing governance capabilities cannot be replicated in most contemporary developing countries. Attempts to do so are likely to result in significant government failures and the abandonment of these strategies. A more relevant approach for Africa is to learn fr...

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Section: Specific Problems Attributed To Africamentioning

confidence: 99%

Section: Growth-promoting Governance Strategiesmentioning

confidence: 99%

Governance and Growth Challenges for Africa

Khan¹

2011

Good Growth and Governance in AfricaRethinking Development Strategies

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“…South Korea, Taiwan, China and Malaysia display significant differences in their catching up strategies and instruments. The general framework outlined here can explain why a different ensemble of instruments and agencies would be effective in inducing higheffort learning given the differences in their structures of firms and their political settlements (Khan 2000b(Khan , 2008Khan and Blankenburg 2009). …”

Section: The Political Settlementmentioning

confidence: 99%

“…Large, relatively well-connected firms benefited from different types of 'learning rents' but managed to buy themselves sufficient protection from different factions to prevent threats of subsidy withdrawal to be credible. The result was significant industrialization but slow growth towards global competitiveness levels (Khan 2000b). Figure 3 suggests that there could have been two types of responses to this problem (apart from abandoning the strategy).…”

Section: Policy Conclusionmentioning

confidence: 99%

“…Ambitious industrial policies were also tried in these countries but generally produced less dramatic results. Yet these countries also had other variants of industrial policies at different times that were sometimes quite successful in accelerating technology acquisition in particular sectors (Khan 2000b;Khan and Blankenburg 2009;Khan 2013). Different policies were successful because each policy created a different configuration of rents and had different requirements of rent allocation and management.…”

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confidence: 99%

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Political Settlements and the Design of Technology Policy

Khan¹

The Industrial Policy Revolution II

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Technology policies have a dual character. They are technical instruments for addressing important contracting failures affecting technology acquisition and at the same time they are interventions that inevitably create new sources of incomes or rents. These two aspects of technology policies are closely related because the intensity and effectiveness of the rent-seeking strategies of different organizations can explain why particular technology policies are effective or ineffective. One of the puzzles in global comparisons of the performance of technology policies is that policies that worked well in one context fared less well in others, and policies with apparently inferior design characteristics worked better in some contexts compared to policies that were more straightforward. We can make sense of these paradoxes by examining the policies in question in the context of the organizations affected by the policy. The 'political settlement' is our shorthand for describing the distribution of bargaining power and technical capabilities across the relevant organizations in that society. A specific technology policy generates rents across different organizations and requires these rents to be allocated and managed in particular ways to achieve the desired outcomes. The political settlement describing the relative power of different organizations can therefore help to explain why the outcomes of similar policies can vary significantly across contexts. This analysis can also help to design better policies in countries in Africa and Asia that have had mixed experiences with technology policies in the past.In their role as technical instruments, technology policies (or industrial policies) address contracting failures constraining the adoption and learning of new technologies. A variety of factors can prevent investors, financiers, technology providers and firms from privately contracting to transfer new technologies to developing countries. Clearly, the first requirement for a successful technology policy is that the policy should address the specific problem affecting technology acquisition in a country or sector at that time. As there are potentially a number of quite different contracting failures that could affect technology adoption, a policy designed to solve one type of problem may be inappropriate for another. Technology policy can therefore fail if its design does not address the most important problems that are actually constraining technology adoption in that context. However, even if the policy was technically appropriate it could still fail if it was not effectively implemented and managed. The problem of implementation has been widely recognized, but the problem has been usually explained in terms of a broad binary distinction between the capacities of effective (developmental) states and other ineffective types of states. A common conclusion is that a country without a

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The influence of non‐financial enterprises' financialization on total factor productivity of enterprises: Promotion or inhibition?

Lyu,

Zhang,

Qing

et al. 2023

Int. J Fin Econ

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In recent years, the increasing trend of financialization of non‐financial enterprises and the improvement of total factor productivity (TFP) have attracted extensive attention. The research sample for this study covers non‐financial firms listed on the Shanghai and Shenzhen stock exchanges from 2008 to 2020. Then an econometric regression model is built to examine the impact of financialization of non‐financial enterprises on enterprises' TFP. The mediation effect model is used to investigate the mechanisms of non‐financial enterprises' financialization (NFEF) on TFP. The heterogeneity in investment efficiency, property rights and political affiliation is further discussed. The findings show that the NFEF has a considerable negative influence on enterprises' TFP, which still stands after endogenous treatment and a series of robustness tests. Moreover, NFEF significantly inhibits TFP by crowding out R&D investment and significantly promotes TFP by alleviating financing restrictions. Both the ‘crowding‐out effect’ and ‘reservoir effect’ of financialization of non‐financial enterprises are verified, and the former is greater. The influence of NFEF on TFP has the heterogeneity in investment efficiency and political affiliation, but the heterogeneity in property rights is insignificant.

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Rent-seeking as Process

Cited by 154 publications

References 0 publications

Governance and Growth Challenges for Africa

Governance and Growth Challenges for Africa

Political Settlements and the Design of Technology Policy

The influence of non‐financial enterprises' financialization on total factor productivity of enterprises: Promotion or inhibition?

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