Nepotism affects on the development of the country​

The effect is to slow down economic development by lowering or eliminating competition in various economic activities and the labour market, preventing the best businesses to operate and expand.

I don’t know of any quantitative studies on the effect of nepotism (which is quite hard to measure) but its first order impact must be same as other regular economic policies that prevent or lower competition in an economy — like restrictive licensing regime allowing only a few firms to operate in a sector or labour market discrimination.

Such policies and nepotism prevent various factors of production, land, labour and capital from flowing to the firms or entrepreneurs who can use them most efficiently to produce maximum possible value. Instead they find their way to the best politically connected businesses. Or the best connected people get jobs.

In theory, such businesses may also happen to be the most efficient users of resource, that will be quite an amazing coincidence though. And even if so, in the absence of competition, the beneficiaries of nepotism are unlikely to remain competitive in the long run.

If nepotism is pervasive enough, then over time, such an economy will become increasingly inefficient showing lower productivity growth (or even stagnant productivity), slowing down economic development and wage growth.

One second order effect of pervasive nepotism could be lower social trust (since mostly everything is rigged) which is known to increase business costs and lower economic growth.

Another second order effect of nepotism may be to distort incentives in the economy. The most entrepreneurial and enterprising people may find it more rewarding to invest money and/or time to befriend politicians and other powerful people instead of innovating. Or, they may simply give up and waste their talent (For example, what would someone like Bill Gates do in Venezuela or Benjamin Franklin in Haiti, if they cannot migrate?)

Explanation:

Explanation:

The effect is to slow down economic development by lowering or eliminating competition in various economic activities and the labour market, preventing the best businesses to operate and expand.

I don’t know of any quantitative studies on the effect of nepotism (which is quite hard to measure) but its first order impact must be same as other regular economic policies that prevent or lower competition in an economy — like restrictive licensing regime allowing only a few firms to operate in a sector or labour market discrimination.

Such policies and nepotism prevent various factors of production, land, labour and capital from flowing to the firms or entrepreneurs who can use them most efficiently to produce maximum possible value. Instead they find their way to the best politically connected businesses. Or the best connected people get jobs.

answer; majority;