Public Choice

, Volume 117, Issue 3–4, pp 333–340 | Cite as

Interest Groups and Investment: A Further Test of the Olson Hypothesis

  • Dennis Coates
  • Jac C. Heckelman


Mancur Olson's institutional sclerosishypothesis may be evident in the effects ofinterest groups on investment in physicalcapital. To test this proposition, we usecross sectional data on 42 countries forwhich information on the number of interestgroups is available to estimate the effectof those groups on the share of GDP thatgoes into physical investment. The resultsindicate that interest groups have adifferent effect on physical investment inOECD and non-OECD countries. In the OECDcountries, we find support for thehypothesis that interest groups harminvestment in physical capital. Indeveloping countries, interest groupseither have no effect on physicalinvestment or they have a slight beneficialimpact.


Public Finance Interest Group Physical Capital Sectional Data Physical Investment 
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Copyright information

© Kluwer Academic Publishers 2003

Authors and Affiliations

  • Dennis Coates
    • 1
  • Jac C. Heckelman
    • 2
  1. 1.Department of EconomicsUniversity of Maryland, Baltimore CountyBaltimoreU.S.A
  2. 2.Department of EconomicsWake Forest UniversityWinston-SalemU.S.A

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