Cronyism, firms’ Productivity and Informal Competition in Egypt
Nesma Ali Ali () and
Additional contact information
Nesma Ali Ali: Heinrich-Heine University Düsseldorf
No 1292, Working Papers from Economic Research Forum
This paper investigates the role of informal firms’ competition in determining the micro-level effect of cronyism on formal-firms’ productivity in the aftermath of the 2011 Egyptian revolution. Based on the World Bank panel Enterprise Surveys, we follow a constructive approach to indicate politically connected firms based on the findings of the previous literature. Using a propensity score reweighting – difference-in-difference estimator, we find that being a crony firm after the revolution could generate unsustainable gains in terms of productivity. This is mostly due to cronyism externalities that engenders a stronger intensity of informal competition, which jeopardizes any increase in productivity and creates a large disequilibrium at the firm level. We also provide evidence that crony firms’ excess in labor is the main channel through which this effect occurs. Hence, crony firm survival in Egypt depends on their ability to balance between the sustain provision of privileges and the threats imposed by the growth of the informal sector.
New Economics Papers: this item is included in nep-afr, nep-ara, nep-cse and nep-iue
Date: 2019, Revised 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Published by The Economic Research Forum (ERF)
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:erg:wpaper:1292
Access Statistics for this paper
More papers in Working Papers from Economic Research Forum Contact information at EDIRC.
Bibliographic data for series maintained by Sherine Ghoneim ().