rent economy
The rent economy is an economic pattern that relies on natural resources without the need to develop them. Examples of these resources are: minerals, water, oil, and gas, and the rent economy is defined as the economy that is concerned with maintaining activities that provide revenues from the sale of rentier wealth, However, these activities do not help to provide a clear picture of the economic situation prevailing in the country. Another definition of rentier economy is the dependence of a country in its economy on a natural resource extracted from the land, so the economy becomes dependent on trade exchange that leads to the emergence of a connected consumer society Import, and this type of economy is not concerned with agriculture or the manufacturing industry.
The development of the rentier economy
Rent is in general the main component of the working mechanism of any economic system, and it includes all its inputs, whether of a private or public nature, but the issue here appears in the method used to manage rent; In order to provide special interests in society, and to promote scientific and technical progress and development.
For a long period of time, real estate rent remained the main source of wealth in the countries of Europe with the feudal economic system, and the great feudal lords used it to establish more luxurious palaces. One of the results of this feudal system was the outbreak of the French Revolution, and with the emergence of development in the industrial sector, the special importance of agricultural rent declined. In the Arab countries, private sources of rent have changed, but they have remained influencing both social and economic development, and many conflicts have emerged that have been concerned with controlling the sources of rent in the twentieth century AD.
In 1973, the rise in oil prices in the countries that produced it attracted many workers and businessmen to work in the oil sector. Especially as it contributed to the emergence of a new rent, so rent in the Arab world became dependent on oil, in addition to the impact of the remittances of migrants in the oil-producing countries or other developed countries, which constitute an important source of rent for the Arab countries, and the oil rent contributed to the development of real estate rents in the main cities in The Arab world, in conjunction with the high increase in the population of these cities.
types of rent
There are several types of rent, and each of them contributes to a certain role in the economic system, and the following is information about the most important of them:
Permanent rent: It is the income resulting from a loan issued against monthly or annual payments that continue for life.
Real estate rent: It is the basic rent on which economic theory relied in establishing the concept of rent.
Absolute rent: is the result of ownership of land; Where their owners do not allow investors to use them without receiving a return, and this consideration is a rent that investors add to their production costs and their profit rate.
The differential rent, also known as the differential rent; It is the result of lands with high fertility, but with the increase in the population and the demand for food products, lands with low fertility are used in agricultural production; Where their use is necessary in order to support the abundance of increasing needs, but the owners of these lands receive an absolute rent, and in return the owners of high-fertility lands receive a differential rent, which is instead of the use of their land; Because of its ability to provide high returns.
Mining rent: is the income that results from investing in natural resources, whether liquid or gaseous, which are extracted from wells or mines, and are characterized by high productivity compared to other sources with low productivity, and the prices of metals, gas, oil, and gold are determined based on production costs. Wealths with less productivity.
Location rent: It is a rent that arises as a result of external revenues that are associated with the private location in units of economic activity, such as being near means of transportation such as railways; This contributes to reducing transportation costs.
Job rent: It is one of the modern types of rent and appears as a result of in-kind features that distinguish employees, such as obtaining free housing, a means of transportation such as a car, and a set of services and goods at discounted prices. These in-kind advantages depend on the employee’s job role; his position, and not with the quantity or quality of the work offered by him; Therefore, employees seek to reach higher positions in their jobs; In order to get the largest possible amount of job rent.
Mudaraba revenue: is the income generated without providing a job; As the speculator is exposed to financial losses, but he receives a very high income most of the time; Which leads to the collection of many wealth that becomes an important source of income, and the speculative proceeds appear clearly in the stock market or the real estate market.
Economic history has known the emergence of many fortunes resulting from speculation; Especially based on the lands that appeared in Western America; Where the prices of land there were witnessing a double and repeated rise during the year, and also the international economy in the southeastern region of the continent of Asia recorded the emergence of great fortunes resulting from speculation in the field of stocks or the real estate sector.
Monopolistic rent: The ratio of monopoly profit is high compared to the average profit achieved by projects in the perfectly competitive market. The increase in monopolistic profits is not necessarily the result of high economic performance, but rather it is often the result of the emergence of a monopoly in the market that determines the level of supply; Where product prices are higher than production costs; Which leads to the provision of additional financial profits to the monopolists, which represents a monopoly rent.