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Economic development and the success of economic policy through which the development goals are achieved can be interpreted as a product of political interactions between citizens and rulers, and social interactions between members of society in the broader sense. As structures and mechanisms of social order, institutions manage the behavior of a group of individuals within a given community. Institutions affect the accountability and responsiveness of officials to citizens and interest groups and, thus, determine the size of the rents created. Further, institutions influence the degree of political control of public bureaucrats and, thus, the distribution of rents within the public sphere. The aim of this paper is to present the concept of rent-seeking and, using an empirical case, to elaborate on its emergence, development and ultimate consequences.

ANATOMY AND CONSEQUENCES OF RENT-SEEKING