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

Ferdinand Eibl and Adeel Malik

No 2016-27, CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford

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.

JEL-codes: F13 F14 O24 O53 P26 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-ara, nep-int and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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