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All in the family: State capture in Tunisia

Listed author(s):
  • Rijkers, Bob
  • Freund, Caroline
  • Nucifora, Antonio

We examine the relationship between entry regulation and the business interests of former President Ben Ali's family using firm-level data from Tunisia. Connected firms account for a disproportionate share of aggregate employment, output and profits, especially in sectors subject to authorization and restrictions on FDI. Quantile regressions show that profit and market share premia from being connected increase along the firm-size distribution, especially in highly regulated sectors. These patterns are partly explained by Ben Ali's relatives sorting into the most profitable sectors. The market shares of connected firms are positively correlated with exit and concentration rates in highly regulated sectors. Although causality is difficult to establish, the results are consistent with the hypothesis that the Ben Ali clan abused entry regulation for private gain at the expense of reduced competition.

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File URL: http://www.sciencedirect.com/science/article/pii/S0304387816300608
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Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 124 (2017)
Issue (Month): C ()
Pages: 41-59

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Handle: RePEc:eee:deveco:v:124:y:2017:i:c:p:41-59
DOI: 10.1016/j.jdeveco.2016.08.002
Contact details of provider: Web page: http://www.elsevier.com/locate/devec

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  1. Ferguson, Thomas & Voth, Hans-Joachim, 2005. "Betting on Hitler - The Value of Political Connections in Nazi Germany," CEPR Discussion Papers 5021, C.E.P.R. Discussion Papers.
  2. Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2002. "The Regulation of Entry," The Quarterly Journal of Economics, Oxford University Press, vol. 117(1), pages 1-37.
  3. Krueger, Anne O, 1990. "Government Failures in Development," Journal of Economic Perspectives, American Economic Association, vol. 4(3), pages 9-23, Summer.
  4. Bob Rijkers & Leila Baghdadi & Gael Raballand, 2017. "Political Connections and Tariff Evasion Evidence from Tunisia," World Bank Economic Review, World Bank Group, vol. 31(2), pages 459-482.
  5. Bliss, Christopher & Di Tella, Rafael, 1997. "Does Competition Kill Corruption?," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 1001-1023, October.
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  7. Rijkers, Bob & Arouri, Hassen & Freund, Caroline & Nucifora, Antonio, 2014. "Which firms create the most jobs in developing countries? Evidence from Tunisia," Labour Economics, Elsevier, vol. 31(C), pages 84-102.
  8. repec:hrv:faseco:30747190 is not listed on IDEAS
  9. Ades, Alberto & Di Tella, Rafael, 1997. "National Champions and Corruption: Some Unpleasant Interventionist Arithmetic," Economic Journal, Royal Economic Society, vol. 107(443), pages 1023-1042, July.
  10. Dani Rodrik, 1996. "Understanding Economic Policy Reform," Journal of Economic Literature, American Economic Association, vol. 34(1), pages 9-41, March.
  11. Xavier Gabaix, 2011. "The Granular Origins of Aggregate Fluctuations," Econometrica, Econometric Society, vol. 79(3), pages 733-772, May.
  12. Thierry Verdier & Daron Acemoglu, 2000. "The Choice between Market Failures and Corruption," American Economic Review, American Economic Association, vol. 90(1), pages 194-211, March.
  13. MARA FACCIO & RONALD W. MASULIS & JOHN J. McCONNELL, 2006. "Political Connections and Corporate Bailouts," Journal of Finance, American Finance Association, vol. 61(6), pages 2597-2635, December.
  14. Hamouda Chekir & Ishac Diwan, 2013. "Distressed Whales on the Nile – Egypt Capitalists in the Wake of the 2010 Revolution," Working Papers 747, Economic Research Forum, revised Apr 2013.
  15. Rafael Di Tella & Alberto Ades, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, vol. 89(4), pages 982-993, September.
  16. Johnson, Simon & Mitton, Todd, 2003. "Cronyism and capital controls: evidence from Malaysia," Journal of Financial Economics, Elsevier, vol. 67(2), pages 351-382, February.
  17. Andrei Shleifer & Robert W. Vishny, 1994. "Politicians and Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 995-1025.
  18. Thomas Ferguson & Hans-Joachim Voth, 2008. "Betting on Hitler—The Value of Political Connections in Nazi Germany," The Quarterly Journal of Economics, Oxford University Press, vol. 123(1), pages 101-137.
  19. Peltzman, Sam, 1976. "Toward a More General Theory of Regulation," Journal of Law and Economics, University of Chicago Press, vol. 19(2), pages 211-240, August.
  20. Freund, Caroline & Bolaky, Bineswaree, 2008. "Trade, regulations, and income," Journal of Development Economics, Elsevier, vol. 87(2), pages 309-321, October.
  21. Raymond Fisman, 2001. "Estimating the Value of Political Connections," American Economic Review, American Economic Association, vol. 91(4), pages 1095-1102, September.
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