Rent-seeking and paradigm of sustainable agricultural development: political rent in Serbian agriculture
2019
Lovre, Koviljko (https://orcid.org/0000-0002-2380-6598) | Brankov, Tatjana (https://orcid.org/0000-0002-3675-6788)
Rent-seeking behaviour is the activity of influencing the political process to obtain favourable outcomes or to avoid unfavourable ones. In other words, groups in search of economic benefits offer incentives to politicians to provide these benefits. Politicians, in turn, respond positively if it is in their own best interests to do so. Therefore, rent-seeking behaviour is generally viewed as wasteful activity. But, some rent-seeking activities may actually increase of overall welfare. If an economy has no distorsions, rent-seeking activity will result in inefficiencies. However, if distorsions do exist, it is possible that rent-seeking activity can improve economic efficiency. The concept of rent was introduced to the economic literature by the D. Ricardo, who referred to the scarcity of land as a factor of production in the face of rising demand for food. The modern concept of rent also encompasses the benefits arising from the possession of other limited resources. This rent obtained in a natural way, namely in the market through the competitive (price) mechanism, is called economic rent. On the other hand, rent obtained in an artificial manner, namely by way of political mechanism and government decisions, is called political rent. This is a form of benefit resulting from the employment of limited resources in activity that does not increase the quantity of products or services, but only leads to the transfer of income between economic entities. Intention of this paper is twofold: first, to extend the paradigm of sustainable agricultural development and concept of political rent; and second, to present the results of the empirical research about political rent in Serbian agriculture as sector supplying public goods.
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