Political Patronage and Economic Opportunity: The Case of Vertical Integration in the Egyptian Clothing Industry

Amirah El-Haddad (a.elhaddad@aucegypt.edu)

No 797, Working Papers from Economic Research Forum

Abstract: This paper investigates the determinants of vertical integration in the Egyptian clothing industry. High-end market segments are a critical determinant of integration. Limited access to finance restricts the possibilities for many firms to undertake the investment required to integrate whilst volatile and uncertain market conditions make firms more likely to rely on the market for their inputs. Business in Egypt suffers from a bureaucracy that is both excessive and inefficient. The ability of businesses to grow through vertical integration, which required licenses, premises and so on, meant using the arbitrary and discretionary decision making system to their favor, negotiating government obstacles to successful business. Those linked to power, prospered, whilst the businesses of others foundered against the wall of bureaucracy and red tape. Access to power is revealed through the pattern of the first Presidential elections to follow the January 2011 revolution.

Pages: 40
Date: 2013-11, Revised 2013-11
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Published by The Economic Research Forum (ERF)

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