Rent-Seeking or Dependency as Explanations of Why Poor People Stay Poor

Abstract

A plausible answer to the question of why poor people stay poor reads that privileged people make or keep them poor. Dependency theories seem to derive their popularity among sociologists and political scientists from containing this answer. While this basic insight might be true to some extent, dependency theories still might be false as accumulating anomalies suggest. The rent-seeking approach offers a competing paradigm according to which price distortions within LDCs and between LDCs and industrialised societies contribute to the preservation of poverty. In contrast to dependency theory, the rent-seeking approach is fully compatible with neo classical micro-economic theory While a review of cross-national studies serves to call dependency theories into question, it cannot yet provide much support for a rent- seeking approach. There are simply not enough studies