Connected National Capital: Industrial Policy and Corporate Performance in Egypt, 1890 - 1950

Cihan Artunç and Mohamed Saleh

No 17424, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We use a newly assembled dataset covering all Egyptian corporations, their founders, and political officeholders, to demonstrate the differential impact of political connections on firm performance across two distinctive political and economic contexts. Before Egypt’s independence in 1922, political connections reduced firm profitability, as connected firms were perceived to be aligned with the anti-colonial, nationalist movement, unsettling investors. After independence, connections improved firm outcomes by granting preferential access to incorporation and shielding connected companies from competition. These dynamics reflect the shift from a laissez-faire colonial regime to a nationalist industrial policy that selectively favored politically connected firms.

Keywords: Firm; dynamics (search for similar items in EconPapers)
JEL-codes: F54 G38 N45 (search for similar items in EconPapers)
Date: 2022-07
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