Payame Noor University Economic Growth and Development Research 2228-5954 5 18 2015 03 21 Estimation of Non-Linearity Effect of Rent-Seeking Opportunities on Economic Growth in Iran: Using Markov-Switching Model Estimation of Non-Linearity Effect of Rent-Seeking Opportunities on Economic Growth in Iran: Using Markov-Switching Model 30 11 1498 FA Ali Mehdiloo Ph.D. Student in Monetary Economics, Tabriz University, Hosein Sadeghi Associate Professor in Energy Economics, Tarbiat Modares University, Tehran, Iran. Abas Assari Arani Associate Professor in Energy Economics, Tarbiat Modares University, Tehran, Iran. Journal Article 2015 03 12 The relation between rent-seeking opportunities and economic growth has been considered by many economists in past decades. They believe that rent-seeking opportunities are reducing economic growth with wasting and non-allocation of resource to productive activities and reducing motivation of entrepreneurship. The purpose of this study is investigating the nonlinear effects of rent-seeking opportunities on economic growth in Iran. For this purpose, the trend of rent-seeking opportunities have been simulated by three input variables that include  gap of official exchange rate, the ratio of building added value to GDP and the size of government using fuzzy logic in first step. Then, in the second step, nonlinearity relation is evaluated between rent-seeking (fuzzy output) and economic growth using Markov-Switching model. Experimental results showed that, rent-seeking  opportunities have negative significant impact on economic growth in three regimes of the model. So that in the first regime that indicates economic boom (since the average of oil income is high) opportunities of rent-seeking by a cofficient of -36/44 has most negative impact and in the third regime that indicates recession (since the average of oil income is low) by a cofficient of -1/61 has lowest negative impact on economic growth.<em></em> The relation between rent-seeking opportunities and economic growth has been considered by many economists in past decades. They believe that rent-seeking opportunities are reducing economic growth with wasting and non-allocation of resource to productive activities and reducing motivation of entrepreneurship. The purpose of this study is investigating the nonlinear effects of rent-seeking opportunities on economic growth in Iran. For this purpose, the trend of rent-seeking opportunities have been simulated by three input variables that include  gap of official exchange rate, the ratio of building added value to GDP and the size of government using fuzzy logic in first step. Then, in the second step, nonlinearity relation is evaluated between rent-seeking (fuzzy output) and economic growth using Markov-Switching model. Experimental results showed that, rent-seeking  opportunities have negative significant impact on economic growth in three regimes of the model. So that in the first regime that indicates economic boom (since the average of oil income is high) opportunities of rent-seeking by a cofficient of -36/44 has most negative impact and in the third regime that indicates recession (since the average of oil income is low) by a cofficient of -1/61 has lowest negative impact on economic growth.<em></em> https://egdr.journals.pnu.ac.ir/article_1498_d8f6b61a4a0dda85b0023d46b98f59f0.pdf