Special-interest groups and growth

This paper explores empirically the relation between special-interest groups and economic growth. Our analysis exploits new data on the number of groups observed across countries and time, in order to mitigate the identification problems associated with earlier studies. Also in contrast to earlier work, we examine the impact of groups on two sources of growth—capital accumulation and technological change—in addition to the impact of groups on output growth. The findings are consistent with Olson’s (The rise and decline of nations: the political economy of economic growth, stagflation, and social rigidities. New Haven, Yale, 1982) claim that societies with greater numbers of interest groups grow slower, accumulate less capital, and experience reduced productivity growth relative to others.