Rent-seeking for budgetary allocation: Preliminary results for 20 countries

In this paper we present quantitative measures of the 'proneness' of different countries to respond to pressure groups in determining the composition of their spending. These, in turn, help us to derive simple measures of the rent-seeking done in relation to the government's spending pie. Despite the fact that these measures are indicative rather than conclusive they do provide some means of comparing the extent of this rent-seeking waste (or at least its rank distribution) across countries. Also, with the appropriate provios the measures may be used as first approximations for the actual waste generated by rent-seeking activities for government spending. Such measures may be of considerable importance when the question of the optimality of government intervention in a given country is considered. Alternatively, it may be of use when an aid package to a given country from an international agency or a major economy is being considered. At least the rank of a given economy in Tables 1 and 2 can profitably be taken as an additional decision parameter in such cases. But over and above the specific results and methodology used herein we consider the contribution of this paper to be in hopefully stirring interest in the important but much neglected issue of macroeconomic rent-seeking. We feel that this paper has shown that the problem of estimating rent-seeking at the macro level can be attempted. Of course, we expect that our approach will eventually be superseded by further work in the area. Nonetheless, this paper will have achieved its main aim if it stimulates further developments in this hereto barren field.