A fiscal sociology of the state offers a useful lens for tracing the evolution of social contracts and the underlying political settlements2 that sustain them (Campbell 1993; Goldscheid 1958). In the Middle East, fiscal policy has gone through dramatic changes over the past 50 years, with state expenditures first growing to extraordinary levels, and then shrinking enormously. The nature and sheer size of the rise and the fall of public spending both reflected and in turn shaped the economic and political history of the region. From small post-independence states, in the rising nationalist states, republics and kingdoms alike, state expenditures rose to reach 50 to 60% of GDP in most of the region during the 1960s and 1970s. These spending levels were in line with the high level of state activism and ambition of the time. In the late 1990s however, the size of the state had shrunk, on average to 25 to 30% of GDP. These dramatic changes reflect important shifts in the composition and degree of inclusiveness of the social coalitions underlying the distinct forms of authoritarian rule in the region.
- Foreign Direct Investment
- International Monetary Fund
- Fiscal Policy
- Middle East
- Informal Sector
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
We want to thank Adeel Malik and Ahmad Galal for helpful comments and suggestions and Tarik Akin for excellent research assistance. The paper draws on material in our book, A Political Economy of the Middle East (Cammett et al. 2015). The data work on fiscal accounts draws on Diwan and Akin (2015).
This is a preview of subscription content, access via your institution.
Unable to display preview. Download preview PDF.
Abouleinem, Soheir, Al-Tathy, Heba, and Kheir-el-Din, Hanaa. 2009. “The Impact of Phasing Out the Petroleum Subsidies in Egypt,” Cairo, Egyptian Center for Economic Studies, Working Paper 145.
Achy, Lahcen. 2011. “Tunisia’s Economic Challenges,” The Carnegie Papers. Beirut: Carnegie Middle East Center.
Achy, Lahcen and Sekkat, Khalid. 2008. “Competition, efficiency and competition policy in Morocco.” In Competition and Efficiency in the Arab World, edited by Khalid Sekkat. New York: Palgrave Macmillan.
Assaad, Ragui. 2009. “Labor Supply, Employment, and Unemployment in the Egyptian Economy, 1988–2006.” In The Egyptian Labor Market Revisited, edited by R. Assaad. Cairo, Egypt: American University in Cairo.
Assaad, Ragui and Saleh, Mohamed. 2013. “Does Improved Local Supply of Schooling Enhance Intergenerational Mobility in Education? Evidence from Jordan,” Economic Research Forum (ERF), Working Paper 788, Cairo, Egypt.
Assaad, Ragui, Krafft, Caroline, and Salehi-Isfahani, Djavad. 2013. “Does the Type of Higher Education Affect Labor Market Outcomes? A Comparison of Egypt and Jordan,” Economic Research Forum (ERF), Working Paper 826, Cairo, Egypt.
Aghion, Philippe, et al. 2001. “Competition, Imitation and Growth with Step-By-Step Innovation,” Review of Economic Studies 68(3): 467–492.
Alley, April Longley. 2010. “The Rules of the Game: Unpacking Patronage Politics in Yemen,” Middle East Journal 64(3): 385–409.
Bellin, Eva. 2002. Stalled Democracy: Capital, Labor, and the Paradox of State-Sponsored Development. Ithaca, NY: Cornell University Press.
Bellin, Eva. 2004. “The Robustness of Authoritarianism in the Middle East: Exceptionalism in Comparative Perspective,” Comparative Politics 36(2) (January): 139–157.
Bergh, Sylvia. 2005. Explaining Slow Economic Growth and Poor Social Development Indicators: The Case of Morocco, Oxford, Oxford Council on Good Governance, Economy Analysis no. 7 (October).
Boubekeur, Amel. 2013. “Rolling Either Way? Algerian Entrepreneurs as Both Agents of Change and Means of Preservation of the System,” Journal of North African Studies 18(3): 469–481.
Cammett, Melani Claire. 2007. Globalization and Business Politics in Arab North Africa: A Comparative Perspective. Cambridge, UK: Cambridge University Press.
Cammett, Melani, Ishac Diwan, Allan Richards, and Waterbury, John. 2015. A Political Economy of the Middle East. Boulder, CO: Westview.
Campbell, John L. 1993. “The State and Fiscal Sociology,” Annual Review of Sociology 19: 163–185.
Chaudhry, Kiren Aziz. 1993. “The Myths of the Market and the Common History of Late Developers,” Politics and Society 21(3): 245–274.
Cingranelli, David L. and Richards, David L. (1999), “Measuring the Level, Pattern, and Sequence of Government Respect for Physical Integrity Rights,” International Studies Quarterly 43(2): 407–417.
Diwan, Ishac. 2013. “Understanding Revolution in the Middle East : The Central Role of the Middle Class,” Middle East Development Journal 5(1): 30.
Diwan, Ishac and Akin, Tarik. 2015. “Fifty Years of Fiscal Policy in the Arab Region,” Economic Research Forum Working Paper no. 914, Cairo: Economic Research Forum.
Diwan, Ishac and Nabli, Mustapha. 2013. “How Does the Arab Street View the Private Sector? An analysis of the Gallup Polls 2009–2012 in 18 Arab Countries,” World Economic Forum.
Diwan, Ishac, Keefer, Philip, and Schiffbauer, Marc. 2015. “Pyramid Capitalism: Political Connections, Regulation, and Firm Productivity in Egypt.” World Bank Working Paper WPS7354, World Bank, Washington, D.C.
Economic and Social Commission for Western Asia (ESCWA). 2013. Arab Middle Class Report. Beirut, Lebanon: UN ESCWA.
Elbadawi, Ibrahim and Keefer, Philip. 2014. “Democracy, Democratic Consolidation, and Military Spending,” Economic Research Forum, Working Paper 848, Cairo, Egypt.
Elbadawi, Ibrahim and Makdisi, Samir. 2007. “Explaining the Democracy Deficit in the Arab World,” Quarterly Review of Economics and Finance 46(5): 813–831.
Goldscheid, R. 1958 . “A Sociological Approach to Problems of Public Finance.” In Classics in the Theory of Public Finance, edited by Richard A. Musgrave and Alan T. Peacock. New York: Macmillan.
Haddad, Bassam. 2012. Business Networks in Syria: The Political Economy of Authoritarian Resilience. Stanford, CA: Stanford University Press.
Henry, Clement. 1996. The Mediterranean debt crescent: Money and power in Algeria, Egypt, Morocco, Tunisia, and Turkey. Gainesville, FL: University Press of Florida.
Henry, Clement Moore and Springborg, Robert. 2010. Globalization and the Politics of Development in the Middle East. Vol. 1. Cambridge: Cambridge University Press.
Heydemann, Steven, ed. 2004. Networks of Privilege in the Middle East: The Politics of Economic Reform Revisited. New York: Palgrave Macmillan.
Hibou, Beatrice. 2006. La Force de L’Obeissance: Economic Politique de la Repression en Tunisie. Paris: Editions de la Decouverte.
Huntington, Samuel. 1991. The Third Wave: Democratization in the Late Twentieth Century. Norman, OK: Oklahoma University Press.
Imam, Patrick A. and Jacobs, Davina F. 2007. “The Effect of Corruption on Tax Revenues in the Middle East.” IMF Working Paper. Washington, D.C.: International Monetary Fund.
International Monetary Fund (IMF). 2012. “Tunisia: Financial System Stability Assessment,” August, IMF Country Report 12/241. Washington, D.C.: IMF.
International Monetary Fund (IMF). 2013. “Algeria 2012, Article IV Consultation,” IMF Country Report 13/47, February. Washington, D.C.: IMF.
Kaboub, Fadel. 2014. “The Making of the Tunisian Revolution.” In Understanding the Political Economy of the Arab Uprisings, edited by Ishac Diwan. London and Hackensack, NJ: World Scientific , 2014.
Kar, Dev and Curcio, Karly. 2011. Illicit Financial Flows from Developing Countries: 2000–2009 – Update with a Focus on Asia. Washington, D.C.: Global Financial Integrity.
Kaufmann, Daniel, Kraay, Aart, and Mastruzzi, Massimo. 2010. “The Worldwide Governance Indicators: Methodology and Analytical Issues.” World Bank Policy Research Working Paper 5430. Washington, D.C.: World Bank.
Khan, Mushtaq H. 2010. “Political Settlements and the Governance of Growth Enhancing Institutions.” Unpublished manuscript, School of Oriental and African Studies (SOAS), London, U.K.
Kienle, Eberhard. 2001. A Grand Delusion: Democracy and Economic Reform in Egypt. London: I.B. Tauris.
King, Stephen Juan. 2009. The new authoritarianism in the Middle East and North Africa. Indiana: Indiana University Press.
Kuhn, Randall. 2012. “On the Role of Human Development in the Arab Spring,” Population and Development Review 38(4): 649–683.
Leenders, Reinhoud. 2012. Spoils of Truce: Corruption and State-Building in Postwar Lebanon. Ithaca, NY: Cornell University Press.
Levitsky, Steven, and Lucan A. Way. 2010. Competitive Authoritarianism: Hybrid Regimes after the Cold War. New York: Cambridge University Press.
Lust, Ellen. 2011. “Missing the Third Wave: Islam, Institutions, and Democracy in the Middle East,” Studies in Comparative International Development 46(2): 163–190.
Lust-Okar, Ellen. 2005. Structuring Conflict in the Arab World: Incumbents, Opponents, and Institutions. Cambridge, U.K.: Cambridge University Press.
Malik, Adeel, and Awadallah, Bassem. 2013. “The Economics of the Arab Spring,” World Development 45: 296–313.
Noland, Marcus and Pack, Howard. 2007. The Arab Economies in a Changing World. Washington, D.C.: Peterson Institute for International Economics.
Osman, Tarek. 2010. “Egypt on the Brink: From Nasser to Mubarak.” New Haven, CT: Yale University Press.
Parks, Thomas, and Cole, William. 2010., “Political Settlements: Implications for International Development Policy and Practice,” Asia Foundation, Occasional Paper 2, San Francisco: Asia Foundation.
Pew Research Center. 2011. “Arab Spring Fails to Improve US Image,” Washington, DC, Pew Research, Global Attitudes Project.
Posusney, Marsha Pripstein and Angrist, Michele Penner. 2005. Authoritarianism in the Middle East: Regimes and Resistance. Boulder, CO: Lynne Rienner Publishers.
Rijkers, Bob, Freund, Caroline, and Nucifora, Antonio. 2013. “The Perils of Industrial Policy: Evidence from Tunisia,” Washington, DC, World Bank, at http://siteresources.worldbank.org/FINANCIALSECTOR/Resources/PerilsofIndustrialPolicy_Tunisia.pdf.
Rijkers, Bob, Freund, Caroline, and Nucifora, Antonio. 2014. “The Perils of Industrial Policy: Evidence from Tunisia,” Working Paper, World Bank, Washington D.C.
Roemer, John E. 1998. Equality of Opportunity. Cambridge, MA: Harvard University Press.
Sadowski, Yahya M. 1991. Political Vegetables? Businessmen and Bureaucrat in the Development of Egyptian Agriculture. Washington, D.C.: Brookings Institution Press.
Salehi-Isfahani, Djavad, Hassine, Nadia Belhaj, and Assaad, Ragui. 2013. “Equality of Opportunity in Educational Achievement in the Middle East and North Africa,” Journal of Economic Inequality, 12(November): 489–515.
Schlumberger, Oliver, ed. 2007. Debating Arab Authoritarianism: Dynamics and Durability in Nondemocratic Regimes. Stanford: Stanford University Press.
Sfakianakis, John. 2004. “The Whales of the Nile: Networks, Businessmen and Bureaucrats during the Era of Privatization in Egypt.” In Networks of Privilege: Rethinking the Politics of Economic Reform in the Middle East, edited by Steven Heydemann. New York: Palgrave Macmillan.
Tlemcani, Rachid. 1999. Etat, Bazar, et Globalisation: L’Aventure de l’Infitah en Algerie. Algiers: Les Editions El Hikma.
Tzanatos, Zafiris. 2013. “The youth and the Arab spring: Ill Diagnoses and Ill Prospects, Executive Magazine, December. Available at http://www.executive-magazine.com/economics-policy/the-youth-and-the-arab-spring.
Wahba, Jackline. 2009. “Informality in Egypt: A Stepping Stone or a Dead End?” Economic Research Forum, Working Paper 456, Cairo, Egypt.
Waterbury, John. 1991. “Twilight of the State Bourgeoisie?” International Journal of Middle East Studies 23(1): 1–17.
Waterbury, John. 1997. “From Social Contracts to Extraction Contracts,” in Entelis, John P., ed., Islam, Democracy, and the State in North Africa, Bloomington, Indiana University Press, 141–176.
World Bank. Various years. World Development Indicators.
World Bank. 2009. From Privilege to Competition: Unlocking Private-Led Growth in the Middle East and North Africa. Washington, D.C.: World Bank.
Editors and Affiliations
© 2016 International Economic Association
About this chapter
Cite this chapter
Cammett, M., Diwan, I. (2016). The Roll-Back of the State and the Rise of Crony Capitalism. In: Diwan, I., Galal, A. (eds) The Middle East Economies in Times of Transition. International Economic Association Series. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-137-52977-0_3
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-137-58394-9
Online ISBN: 978-1-137-52977-0
eBook Packages: Economics and FinanceEconomics and Finance (R0)