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All in the family : state capture in Tunisia

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  • Freund,Caroline
  • Nucifora,Antonio
  • Rijkers,Bob

Abstract

This paper examines 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.

Suggested Citation

  • Freund,Caroline & Nucifora,Antonio & Rijkers,Bob, 2014. "All in the family : state capture in Tunisia," Policy Research Working Paper Series 6810, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6810
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    References listed on IDEAS

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    Cited by:

    1. Marc Schiffbauer & Abdoulaye Sy & Sahar Hussain & Hania Sahnoun & Philip Keefer, 2015. "Jobs or Privileges : Unleashing the Employment Potential of the Middle East and North Africa," World Bank Publications, The World Bank, number 20591.
    2. Mohamed Ali Marouani & Rim Mouelhi, 2014. "Employment Growth, Productivity and Jobs reallocations in Tunisia: A Microdata Analysis," Working Papers DT/2014/13, DIAL (Développement, Institutions et Mondialisation).
    3. 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.
    4. repec:eee:jcecon:v:46:y:2018:i:2:p:656-682 is not listed on IDEAS
    5. Mohammed Said Saadi, 2016. "Moroccan Cronyism: Facts, Mechanisms and Impact," Working Papers 1063, Economic Research Forum, revised 11 2016.
    6. World Bank Group, 2016. "An Integrated Framework for Jobs in Fragile and Conflict Situations," World Bank Other Operational Studies 25296, The World Bank.
    7. El-Mallakh, Nelly & Maurel, Mathilde & Speciale, Biagio, 2018. "Arab spring protests and women's labor market outcomes: Evidence from the Egyptian revolution," Journal of Comparative Economics, Elsevier, vol. 46(2), pages 656-682.
    8. Mary Hallward-Driemeier & Lant Pritchett, 2015. "How Business Is Done in the Developing World: Deals versus Rules," Journal of Economic Perspectives, American Economic Association, vol. 29(3), pages 121-140, Summer.
    9. Mohamed Ali Marouani & Rim Mouelhi, 2016. "Contribution of Structural Change to Productivity Growth: Evidence from Tunisia," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 25(1), pages 110-132.
    10. Elena Ianchovichina & Lili Mottaghi & Shantayanan Devarajan, "undated". "Middle East and North Africa Economic Monitor, October 2015," World Bank Other Operational Studies 22711, The World Bank.
    11. Elena Ianchovichina, 2014. "On Shared Prosperity in the Middle East and North Africa," World Bank Other Operational Studies 20546, The World Bank.
    12. 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.
    13. Esra Çeviker Gürakar & Tuba Bircan Ildiri, 2016. "Political Connections and Public Procurement in Turkey: Evidence from Construction Work Contracts," Working Papers 1053, Economic Research Forum, revised 10 2016.
    14. Ghosh, Saibal, 2016. "Political transition and bank performance: How important was the Arab Spring?," Journal of Comparative Economics, Elsevier, vol. 44(2), pages 372-382.
    15. Cali,Massimiliano & Hollweg,Claire Honore & Ruppert Bulmer,Elizabeth N., 2015. "Seeking shared prosperity through trade," Policy Research Working Paper Series 7314, The World Bank.
    16. Hamdi, Helmi & Hakimi, Abdelaziz, 2015. "Corruption, FDI and Growth: All the truths of a corrupted regime before and after the social upsurge in Tunisia," MPRA Paper 63748, University Library of Munich, Germany.
    17. repec:eco:journ1:2017-03-25 is not listed on IDEAS
    18. Adrian Smith, 2015. "Editor's choice Economic (in)security and global value chains: the dynamics of industrial and trade integration in the Euro-Mediterranean macro-region," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 8(3), pages 439-458.
    19. Mélise Jaud & Caroline Freund, 2015. "Champions Wanted," World Bank Publications, The World Bank, number 21638.
    20. Arampatzi,Efstratia & Burger,Martijn & Ianchovichina,Elena & Röhricht,Tina & Veenhoven,Ruut & Arampatzi,Efstratia & Burger,Martijn & Ianchovichina,Elena & Röhricht,Tina & Veenhoven,Ruut, 2015. "Unhappy development : dissatisfaction with life on the eve of the Arab spring," Policy Research Working Paper Series 7488, The World Bank.
    21. Hendrik W. Kruse & Inma Martínez-Zarzoso & Leila Baghdadi, 2017. "Standards and Market Power: Evidence from Tunisia," Working Papers 1131, Economic Research Forum, revised 08 2017.
    22. Mohamed Oubenal, 2016. "Crony Interlockers and The Centrality of Banks: The Network of Moroccan Listed Companies," Working Papers 1066, Economic Research Forum, revised 12 Jan 2016.
    23. repec:gam:jadmsc:v:8:y:2018:i:2:p:12-:d:140399 is not listed on IDEAS
    24. Steffen Hertog, 2016. "Is There an Arab Variety of Capitalism?," Working Papers 1068, Economic Research Forum, revised 12 Jun 2016.
    25. Philippe Adair & Ali Abdallah, 2015. "Overcapacities in the Tunisian tourism industry," Post-Print hal-01667222, HAL.

    More about this item

    Keywords

    Investment and Investment Climate; Debt Markets; Transport Economics Policy&Planning; Microfinance; Emerging Markets;

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy

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