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The Politics of Partial Liberalization: Cronyism and Non-Tariff Protection in Mubarak's Egypt

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  • Ferdinand Eibl
  • Adeel Malik

Abstract

This paper provides one of the first systematic empirical assessments of the impact of political connections on trade protection. Based on a unique compilation of sector-level data on non-tariff measures (NTMs) and politically connected businessmen in Mubarak-era Egypt, we explore the within-sector variation in NTMs over time, and show that sectors populated by politically connected businessmen witnessed systematically higher incidence and density of non-tariff protection. Our results suggest that the presence of cronies is a strong predictor of the subsequent introduction of NTMs. Crony presence also shapes the density of NTMs as measured by the share of products subject to NTMs. Our results are derived from the robust empirical methods that simultaneously address temporal dependence, fixed effects and endogeneity concerns. To establish causality, we take advantage of the across the board cut in tariffs in the wake of the EU-Egypt free trade agreement in 2004-05 to show that sectors with crony activity were compensated significantly more by new NTMs than non-crony sectors.

Suggested Citation

  • Ferdinand Eibl & Adeel Malik, 2016. "The Politics of Partial Liberalization: Cronyism and Non-Tariff Protection in Mubarak's Egypt," CSAE Working Paper Series 2016-27, Centre for the Study of African Economies, University of Oxford.
    • Handle: RePEc:csa:wpaper:2016-27
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    Cited by:

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    2. Kruse, Hendrik W. & Martínez-Zarzoso, Inma & Baghdadi, Leila, 2021. "Standards and political connections: Evidence from Tunisia," Journal of Development Economics, Elsevier, vol. 153(C).
    3. Ruckteschler, Christian & Malik, Adeel & Eibl, Ferdinand, 2022. "Politics of trade protection in an autocracy: Evidence from an EU tariff liberalization in Morocco," European Journal of Political Economy, Elsevier, vol. 71(C).

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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • P26 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Property Rights

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