World Congress for Middle Eastern Studies

Barcelona, July 19th – 24th 2010


The State and the Market in the Middle East and North Africa (155) - NOT_DEFINED activity_field_Panel

· NOT_DEFINED date: TUE 20, 5.00-7.00pm

· NOT_DEFINED institution: University of Tübingen (Germany)

· NOT_DEFINED organizer: Torsten Matzke

· NOT_DEFINED language: English

· NOT_DEFINED description:
In many Middle Eastern and North African countries, market-oriented structural adjustment policies have had a notable impact on political and economic systems. Economic liberalisation has created new opportunities for the private sector and limited the role of the state in the economy. Even in those countries which were not forced to liberalise their economies according to the Washington Consensus, there are increasing efforts to end the dependence on external rents, diversify into new sectors and encourage private investment. Throughout the region, the private sector is today seen as a motor of growth with private entrepreneurs as its agents: market-led, not state-led development seems to be the new formula.
Despite the widespread advent of market-oriented reforms, however, there are many indications that they have not substantially altered the dominant role of the state. In the past, the MENA region was a prime example for the political embeddedness of markets, as demonstrated by the prevalence of fundamentally political patterns of economic interaction. This panel inquires into the nature of the relationship between the state and the market in the region today, taking into account the political factors shaping economic reform on the one hand and the actual and potential political implications of reform on the other. It asks in what way this relationship has been redefined by globalisation and structural adjustment, and whether the state's regulating force in the economy has really been replaced by that of the market. The panel includes studies on both economic structures and agents in various parts of the region.

Chair: Steven Heydemann (United States Institute of Peace Washington, D.C.)

Discussant: Pete W. Moore (Case Western Reserve University Cleveland, OH)

Paper presenter: Markus Loewe (German Development Institute, Bonn), “Egypt’s New Industrial Policy Strategy: Efficient, transparent and non-discriminatory”
Globalisation exerts pressure on all countries world-wide to adapt their economic structures and increase competitiveness. Especially in times of financial and economic crisis, discussion centres on the role of the state in facilitating and accelerating structural change. Consensus is increasing that certain prudent industrial policies are helpful in industrialised countries in order to solve market failures. At the same time, uncertainty prevails with respect to developing countries, because interventions that influence the sectoral composition of an economy necessarily entail the risks of misallocation and political capture (government failure).
In the past, Egypt has followed a statist mode of development and top-down industrial policies have played a central role. Since the government reshuffle in 2004, Egypt has been pursuing a new industrial policy strategy that essentially draws from the good experience of Tunisia with its industrial upgrading programme. Has the Egyptian government thereby succeeded in establishing an efficient, market-oriented and non-discriminatory policy of promoting innovation, technical upgrading and structural change in its industrial sector just like Tunisia? Evidence suggests that Egypt’s new industrial policy strategy is in fact much more market oriented and less redistributive than it used to be. The problem is, however, that only a very small slice of large exporting firms benefits from the strategy. The mass of small and medium-size companies has no access to the government programmes and therefore finds it even harder today to compete with the big ones and eventually become able to export. Access to these programmes is still limited to a small group of companies which is almost identical to the clientele of the reform-oriented segment of the regime. In addition, the big decisions of who succeeds on the market or not are taken on other policy fields: licensing, regulation, jurisprudence. Several sectors are still controlled by monopolists that are protected by discriminatory regulation and dispute settlement. Others are dominated by a small group of well-connected entrepreneurs who know how to make life difficult for any ascending competitor.

Paper presenter: Torsten Matzke (University of Tübingen), “States and Businesses in the Arab World: A one-sided relationship?”
While the private sector in the Arab World was in the past mostly seen as politically and economically dependent on the state, this asymmetrical character of state-business relations seems to have changed. Recent publications have stressed the growing political influence of economic elites. It is, however, debatable whether private capitalists constitute an autonomous bourgeoisie capable of challenging the state. This contribution draws on existing attempts at conceptualising state-business relations for a comparative analysis of selected Arab countries, thereby linking the literature on state-business relations in other world regions with studies of Arab states and private sectors. The comparison serves to identify the types of state-business relations prevalent in the region. The paper then discusses possible explanations for the observed typological differences and assesses the potential of businesses to promote reform.