Do Democracies Breed Rent‐seeking Behavior?

Abstract

Using objective institutional historical data for the case of Uruguay, we test the link between rent‐seeking behavior in democracies using time‐series and panel data approaches. We find three main results. First, democratic regimes are negatively linked with rent‐seeking actions. Second, the longer the duration of democracy, the less rent seeking in a society. Third, legislation enacted more transparently is negatively correlated with rent‐seeking behavior. Our results are robust to the use of different econometric methods and basic robustness tests and are consistent with prevailing theory.