Nepali Times
Letters
Rent-seeking


Rent-seeking has nothing to do with house rent or physical capital, as CK Lal suggests ('Power for the powerhungry,' State of the State, #323). Economist Ann Krueger used the term in the 1970s to explain the behaviour of economic actors in India when the Indian economy was plagued by the 'License Raj'. It is used in political economics literature while discussing corruption, lobbying, and other unfair practices, and refers to the seeking of financial benefits by securing unfair market advantages using political or bureaucratic influences.

The rent-seeking behaviour of major actors in hydropower-in the form of securing license for easy commissions or winning favourable contractual terms through unfair lobbying-is the key barrier to developing the sector. Unlike Mr Lal, I think it makes a lot of economic sense for potential hydropower investors to learn from real estate-investing middle-class Nepalis who expect fair financial returns and don't spend their money bribing decision makers.

In its extended meaning, 'rent-seeking' is also used to describe intellectuals who claim to be more than they are worth through misinformation. One wonders if Lal's motive in using a term he does not fully understand is an act of intellectual rent-seeking, attempting to give the impression that he is familiar with economics.

Surya Raj Acharya,
Tokyo



LATEST ISSUE
638
(11 JAN 2013 - 17 JAN 2013)


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