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When Do Autocracies Start to Liberalize Foreign Trade? Evidence from Four Cases in the Arab World

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  • Thomas Richter

    () (GIGA German Institute of Global and Area Studies)

Abstract

This paper argues that trade and capital account reforms within autocracies underlie the primacy of foreign currency procurement. A longitudinal comparison of four countries (Morocco, Tunisia, Egypt and Jordan) in the Middle East and North Africa region shows a historical sequencing of reforms. In the 1960s and 1970s, the foreign exchange scarcity was managed primarily by rising restrictions, accumulation of debt and a number of unilateral country-specific strategies, including broader economic openings (infitah) and isolated capital account liberalizations. However, IMF-friendly reforms (orthodox trade liberalization) only became a political option in the context of the extreme fiscal scarcity of the 1980s and 1990s, after the failure of these earlier policies and the drying up of alternative unconditional finance. Additionally, the time differences regarding when orthodox reforms are implemented within autocracies mainly relate to global and regional cycles of different external windfall gains. These findings complement recent debates about the rush to free trade in at least two regards. First, they point to distinct causal mechanisms depending on the type of political regime (for example, autocracy versus democracy), explaining the beginning of trade and capital account liberalizations among developing countries. Second, they reveal the conditional historical influence of neoliberal ideas among structurally similar autocracies.

Suggested Citation

  • Thomas Richter, 2010. "When Do Autocracies Start to Liberalize Foreign Trade? Evidence from Four Cases in the Arab World," GIGA Working Paper Series 131, GIGA German Institute of Global and Area Studies.
  • Handle: RePEc:gig:wpaper:131
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    File URL: http://repec.giga-hamburg.de/pdf/giga_10_wp131_richter.pdf
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    References listed on IDEAS

    as
    1. Giavazzi, Francesco & Tabellini, Guido, 2005. "Economic and political liberalizations," Journal of Monetary Economics, Elsevier, vol. 52(7), pages 1297-1330, October.
    2. Chwieroth, Jeffrey, 2007. "Neoliberal Economists and Capital Account Liberalization in Emerging Markets," International Organization, Cambridge University Press, vol. 61(02), pages 443-463, April.
    3. Milner, Helen V. & Kubota, Keiko, 2005. "Why the Move to Free Trade? Democracy and Trade Policy in the Developing Countries," International Organization, Cambridge University Press, vol. 59(01), pages 107-143, January.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Autocracy; trade and capital account liberalization; Morocco; Tunisia; Egypt; Jordan;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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