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- Title
Cronyism as an Outcome of Institutional Settings: The Case of pre-2011 Egypt.
- Authors
Sabry, Mohamed Ismail
- Abstract
Why are State Business Relations in Egypt characterized by widely acknowledged high levels of cronyism? This paper is investigating the institutional factors explaining this research question with a focus on pre-2011 Egypt. Based on a general theoretical discussion, certain institutions were proposed as being responsible. A game theoretical model was then introduced explaining why cronyism was the best strategy for various business players in contrast to aggregating and lobbying their efforts to obtain government available resources, whether these resources are energy subsidies, public banks' credit or regulations. Choosing cronyism was attributed to the presence of a weak and dependent private sector, where businesspeople are unable to aggregate their power; a relatively stronger government; poor governance performance; higher levels of regime legitimization practices, such as providing generous consumer subsidies; and economic growth caused by an increase in resources rather than by governance institutional improvement. A discussion of the the available literature and empirical data on pre-2011 Egypt, going over the various proposed institutional factors, helped to support these arguments. The paper concludes by briefly pointing out the possible effects of the post-2011 political-economic developments on the prospects of cronyism in Egypt. The conclusion also discusses the relevance of the introduced model to many world countries, including the MENA region.
- Subjects
INDUSTRIAL relations; BUSINESS research; BUSINESS planning; LOBBYING; BUSINESSPEOPLE
- Publication
Topics in Middle Eastern & North African Economies: Proceedings of the Middle East Economic Association, 2018, Vol 20, Issue 1, p85
- ISSN
2334-282X
- Publication type
Article