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Does democratization imply faster growth, less corruption and less inefficiency? Past studies yield ambiguous results on the effects of democracy on economic performance and growth. We develop a simple two-sector endogenous growth model that shows both very young and mature democracies grow faster than countries in mid stages of democratization, producing a 'U' effect. This effect results from the pattern of rent seeking as it diverts from the provision of public goods. Rent-seekers act as monopolistic competitors. Initially, more democracy increases their number, raising aggregate rents. However, rents per rent-seeker fall with the number of rent seekers, aggregate rents fall in mature democracies. Thus, rents show an 'inverted-U' effects in relation to democracy. We find fairly robust supportive evidence for the latter.

A simple two-sector endogenous growth model of government spending and growth is developed with a producing and a lobbying sector. Lobbyists divert government spending for private gains. One key innovation is this: With democratization, information (and power) becomes more diffused (public), allowing more lobbyists to lobby but reducing gains per lobbyist. Thus, aggregate rents rise with the number of lobbyists but fall with increasing competition among them. This simple mechanism produces a "U" curve in which growth falls with early democratization but rises later, and a related "inverted U" curve in which rents rise with early democratization but fall later. Extensive empirical test of the interrelationship between growth, government spending, corruption (Proxy for rents) and democracy for 61 countries verify the key structural aspects of the model.

Diffusion du document : INRA Unité d'Economie et Sociologie rurales 65 rue de Saint-Brieuc 35042 Rennes Cedex (FRA); L'article vise à étudier les facteurs économiques et politiques d'évolution de la politique agricole commune (PAC) après la réforme de 1992 et comporte deux parties. La première réexamine la réforme de 1992 qui s'est traduite par un renforcement du rôle du marché et des aides aux facteurs de production, en soulignant le contraste avec la réforme de l'OCM lait de 1984 qui reposait au contraire sur le contrôle de l'offre. Cette différence est expliquée par l'action collective internationale des pays moins protectionnistes poussés par des intérêts commerciaux, dans le cadre du GATT. Trop conçue comme une réponse à la pression internationale, la réforme de 1992 apparaît comme inachevée par rapport aux objectifs à long terme de l'agriculture européenne. La seconde partie formalise la nature supranationale du jeu de la PAC, lié à la solidarité financière. Une externalité existe entre valeur nationale et communautaire des biens agricoles et donc des soutiens de prix. Le biais des décisions en faveur du soutien rend les réformes profondes plus difficiles encore que dans une régulation politique nationale. L'évolution de la PAC est liée aux évolutions des poids politiques des intérêts des groupes de pression. La visibilité des aides affaiblira le poids des agriculteurs, l'élargissement récent vers le Nord le réduira aussi en faveur de l'environnement et l'élargissement vers l'Est rendra nul ou négatif, pour tous les Etats membres actuels, le retour lié à la PAC. Ces pressions iront, mais lentement, dans le sens d'une poursuite de la réforme.

Rapport ayant fait l'objet d'un article succinct : L'agriculture et l'élargissement de l'Union européenne aux pays d'Europe centrale et orientale : l'intégration, un atout pour la transition, une épreuve pour la politique agricole commune ", INRA, Rennes, 04/1995, 24 p. Diffusion du document : INRA Station d'Economie et Sociologie rurales 65 rue de Saint-Brieuc 35042 Rennes Cedex (FRA); L'intégration des PECO (Pologne, Hongrie, République Tchèque et Slovaque, Roumanie et Bulgarie) à l'Union européenne (UE) est un enjeu politique et économique majeur pour les deux parties. L'agriculture est toujours un point sensible dans la création d'unions douanières. L'un des enjeux majeurs de l'intégration est le coût de la PAC étendue aux PECO. Le coût de l'élargissement rapide (5 ans) serait important en transposant toute la PAC et les fonds structurels, mais bien inférieur à certains chiffrages publiés. Une intégration complète différée coûterait plus cher encore par restauration plus marquée du potentiel agricole des PECO. Il faut donc diminuer les obstacles, au moins financiers, à l'intégration agricole. Une intégration partielle en l'an 2000 par le biais d'une union douanière (avec unicité directe ou progressive des prix ; maintien des fonds structurels à un niveau assimilable par les PECO ; réservation des aides compensatrices aux actuels membres de l'UE et réduction progressive : attribution de quotas de référence aux PECO avec baisse de prix) semble être un scénario raisonnable et réalisable. La PAC doit être amendée afin de faciliter cette transition : diminution des aides non liées à l'environnement et à l'entretien de l'espace, baisse sensible des prix de soutien en particulier sur le lait et le sucre (compensés transitoirement à l'Ouest), mise en place d'un système de double (ou triple) prix pour le lait, réduction de l'intervention par stockage à un filet de sécurité avec prix d'achat très proche des cours mondiaux... Une telle stratégie d'intégration partielle rapide présente quelques risques. Elle peut cependant contribuer à une dynamique positive des réformes agricoles à l'Ouest comme à l'Est et faciliter l'intégration complète des PECO dans une Grande Europe dans une dizaine d'années.

Economic policy, policy reform and sustainability are viewed as a political- collective action process. The challenge is to provide incentives for collective action that yield an efficient allocation of a country's resources and to prevent the reemergence of the old policy regime once a crises is resolved. A modified Ricardo-Viner model with rent seeking households is used to provide insights into the factors that cause action to be misdirected, and into how policy reform might be induced and sustained. The analysis suggests the use of instruments that decrease the scope for rent seeking, provide resources - in the form of public goods - to the less influential, and compensatory payments to those disadvantaged by reform. Several recent IBRD and IMF country programs include these types of payments.

Using an endogenous growth framework, this paper analyzes the impact of lobbying for public goods on the long run steady-state growth rate of the economy. A socially optimal level of lobbying can be found to exist in the absence of a social planner. Atomistic households, however, exceed this level by viewing taxes as fixed, ignoring the aggregate tax impact of lobbying via increased public expenditures. Two extensions are presented. In one, anti-tax lobbying is analyzed, drawing parallel results. In another, a quasi-public good is introduced, lobbying for which is based not on altruism, but on private gains, though public gains occur as a side effect.

A two sector general equilibrium model is developed in which households can influence the government's choice of the relative price of traded goods and the level of public goods supplied to each sector. The model is used to illustrate key problems addressed by the political economy literature, modeling issues that arise, and the nature of insights that can be obtained that traditional approaches cannot discern.

The paper develops a formal model of government's economic decisions as influenced by private agents within the context of neoclassical political economy. The government is assumed to form preferences over interest groups in the economy; in turn these preferences are influenced by the rent seeking behavior of these groups. An open, two-household, two-sector general equilibrium model is constructed to depict an environment in which preference-maximizing (rational) individuals allocate otherwise productive labor to directly unproductive rent seeking activities in order to exert political pressure on the government's choice of policy instruments. With the aid of five comparative-static experiments, the game-theoretic component and the second-best nature of the rent seeking environment is discussed. Insights are also provided on the influence of technological change, and changes in lobbying efficiency on resources allocated to rent seeking by interest groups. Key words: Rent Seeking, Political Economy, General Equilibrium.

Governments often establish economic policy in response to political pressure by interest groups. Since these groups' political activities may alter prices, economies so affected cannot be characterized by perfect competition. We develop a model of a "lobbying economy" in which consumers' choice of political activity simultaneously determines relative prices and income levels. They balance the loss in income due to lobbying payments against the potential gain in wealth from a favorable government price policy. This paper proves the existence of an equilibrium in economies of this sort. We reformulate the economy as a generalized lobbying game and prove the existence of a non-cooperative equilibrium in the game. This equilibrium is then shown to be an equilibrium in the economy.

This dissertation extends the Grossman-Helpman models of endogenous trade policy formation to incorporate local and global production and consumption externalities, and to allow governments to choose domestic production or consumption policies together with trade interventions. The models presented are among the first to allow environmental quality and the structure of industry protection to be simultaneously evaluated in a political economy framework, when some industry groups lobby their governments for higher output prices. The equilibrium tax and subsidy policies are implicitly expressed as the sum of distinct political support, terms-of-trade, and local and global environmental effects. Whether these effects reinforce or counterbalance each other depends on whether an industry is organized, whether the good is imported or exported, whether the externality is caused by production or consumption, and, in the large-country models, on whether governments set policies noncooperatively or cooperatively. The model results imply a political economy version of Bhagwati's normative targeting principle: governments use the most efficient policy available to satisfy the lobbies, to address the externalities, and, in the noncooperative large-country model, to exploit international market power. All of the initial Grossman-Helpman results (for the small-country model and the noncooperative and cooperative large-country models) are shown to be special cases where governments have only trade policy available and there are no externalities. In the small-country model and the cooperative large-country model, when there are production externalities, the lobbying of a polluting industry usually leads to lower environmental quality than socially optimal, but with terms-of-trade effects or for particular preferences cases the equilibrium policies may induce environmental quality higher than socially optimal. When there are consumption externalities, and the government has consumption (or production) as well as trade policy available, environmental quality will be socially optimal (again, unless governments exploit market power). Thus, depending on the policies available, a local or global consumption externality will be fully internalized, even though polluting industries lobby and production may be distorted. This dissertation also shows that--in contrast to standard economic theory--the use of trade policy alone can lead to higher environmental quality than a more direct domestic policy alone. Ph. D.