GOVERNMENT FAILURE

The term was coined by Krueger in 1974

Definition:

The quest for privileged benefits from government

(Aidt, 2016).
It is the notion that economic actors actively use the
political process to further narrow private interests
(Cairns, 1985).
Any return in excess of what is
required for an input to provide its
productive services (Cairns, 1985).
The payment to a factor of production
in excess of what is required to keep
that factor in its present use
(Henderson, nd.)
Economic wealth obtained through
shrewd or potentially manipulative use
of resources (Majaski, 2021).
 Interest groups engage in non-productive activities for the
purpose of redistributing income to themselves (Tolison, 1982;
Hartle 1983 as cited in Cairns, 1985).
Lobbying Donating Funds

Licenses
Grants
Subsidies
Loans

Permits/ Clearances
 Corruption

Market
Inefficiency
Social loss
 International
Oil and gas industry spent $124.4 million on federal lobbying
amid record profits in 2022 (Sayki and Cloutier, 2023)
National
National
Local
REGULATORY CAPTURE

George Stigler's work "The Theory

of Economic Regulation" presents
the concept of "Regulatory
Capture" - (Kenton, 2021)
PUBLIC INTEREST THEORY OF REGULATION
The theory that regulation is designed to promote the public good by protecting
consumers from harm, promoting competition, and ensuring that industries
operate in a socially responsible manner (Levine & Forrence, 1990).
ECONOMIC THEORY OF REGULATION

The theory is that regulation is

driven by the self-interest of
regulated industries, which
seek to use regulation to
restrict competition and
protect their profits (Levine &
Forrence, 1990).
 REGULATORY CAPTURE

Regulatory capture is a situation in

which a regulatory agency, established
to act in the public interest, instead
advances the interests of the industry it
is supposed to regulate (Levine &
Forrence, 1990)
REGULATORY CAPTURE

According to Stigler (1971) as cited by

Llanto (2016)

“Regulatory capture contradicts the

assumption of a benevolent and
competent government.”
PUBLIC AGENDA

Public Agenda plays a key role in

determing whether or not regulatory
capture occurs (Levine & Forrence, 1990)
 PHILIPPINE TOBACCO INDUSTRY

Political Corruption
Health Denial
Consultant engagement
Pack labelling resistance
Aggressive Marketing
THE ENVIRONMENTAL PROTECTION AGENCY (EPA)
Scott Pruitt's leadership has led to a significant weakening of the EPA,
which has in turn benefited polluting industries and harmed public
health (Dillon 2018).
Local
National
International
 Government Favoritism
The government supports a specific company or sector of the
economy. As a result, it induces businesses to think of new
methods to gain privilege instead of new ways to add value.

(Mitchell et al., 2019).

 Rejection of SINOVAC in Costa Rica
Due to the vaccine's allegedly poor efficacy, the immunization
advisory council of Costa Rica rejected China's Sinovac vaccine.
According to the World Health Organization, it has a 50.7%
effectiveness rate.
(Guenot, 2021).
 Dennis Uy's DITO Telco
Between China Telecom and Uy's company, Mislatel (now DITO
Telco). Uy’s company won the bid despite little or no experience
in telecommunications.
(Almendral, 2019)
 Davao City
Infrastructure
Since Duterte took office as
president in 2016, Christopher
Lawrence T. Go, the sole
owner of CLTG Builders. The
construction company has
reportedly secured over 700
million pesos in contracts
from DPWH.

(Almendral, 2019)