Crony Capitalism Arab Style

Egypt protests cc

Where there is a strongman there is rampant cronyism. Like the sun rising in the east this simply is. Tunisia and Egypt were (are?) great examples of this.

In the wake of the Arab Spring data on the extent to which crony capitalism dominated the economies of the 2 countries was revealed. The World Bank crunched the numbers.

(From The Economist)

The Arab Spring has not delivered all that was hoped for it, but it did call time on two egregious examples of crony capitalism. After the revolution in Tunisia in 2011, 214 businesses, and assets worth $13 billion, including 550 properties and 48 boats and yachts, were confiscated from Zine el-Abidine Ben Ali, the deposed president, and his relatives and associates. In Egypt at least 469 businesses were linked to Hosni Mubarak, ousted as its president soon after Mr Ben Ali, some of which were seized.

Using data that have only come to light since the Arab Spring, World Bank economists have conducted a uniquely detailed study of the damage that crony capitalism does to an economy. Its findings suggest that, among Egypt’s medium-sized and large firms, the politically connected ones made 60% of all the profits in 2010. Yet their share of the economy was far smaller and they provided only 11% of private-sector employment.

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