The Formation and Development of Economic Networks in Syria: Implications for Economic and Fiscal Reforms, 1986–2000

Abstract

In virtually all developing countries,¹ and beyond,² relations between the state and business have taken the form of economic or policy networks that may or may not operate through formal institutions. Though networks are ubiquitous in nearly all settings where state and business cooperate, their impact on economic growth and development can be more or less detrimental or positive depending on the conditions of their emergence, their internal dynamics, and their relation to the broader institutional and social context.³ This chapter posits that the effects of the maturing economic net-works—combining capitalists and bureaucrats—in Syria in the late 1980s became extant in the economic, regulatory, and fiscal policy reforms of the late 1980s and the 1990s. The foreign exchange crisis of 1986 marks the acceleration of economic networks’ consolidation and influence, albeit at an informal level, until 1991 when these networks hijacked the official institutional expression of the “private sector” under the rubric of the government’s reform policy, that is, al-ta`adudiyya al-iqtisadiyya (economic pluralism). The role of privileged economic networks⁴ in bringing about economic and fiscal change can be analyzed by examining the institutional and social context within which these networks emerge and on which their sustenance rests. Although the impact of such networks has been largely limited to middle-and lower-range policies, their ability to bypass or manipulate laws and regulations has significantly widened their reach and allowed them, intentionally or inadvertently, to shape general developmental change in idiosyncratic ways that were detrimental to economic productivity.⁵