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Crony Capitalism in the Middle EastBusiness and Politics from Liberalization to the Arab Spring$
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Ishac Diwan, Adeel Malik, and Izak Atiyas

Print publication date: 2019

Print ISBN-13: 9780198799870

Published to Oxford Scholarship Online: July 2019

DOI: 10.1093/oso/9780198799870.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 18 October 2021

Clientelism, Cronyism, and Job Creation in Lebanon

Clientelism, Cronyism, and Job Creation in Lebanon

(p.119) 4 Clientelism, Cronyism, and Job Creation in Lebanon
Crony Capitalism in the Middle East

Ishac Diwan

Jamal Ibrahim Haidar

Oxford University Press

This chapter investigates how politically connected firms affect job creation in Lebanon. Using firm-level census data, the chapter first establishes that politically connected firms create more jobs than otherwise similar unconnected firms. This overstaffing increased around the 2009 parliamentary elections. These findings suggest that firms and politicians exchange favors, whereby firms receive various regulatory privileges, and pay-back politicians (in part) by employing some of their supporters. Second, the chapter evaluates the economic costs of cronyism, showing how sectors with more connected firms create fewer jobs compared to otherwise similar sectors with no cronyism. Using several pieces of evidence, the authors argue that this occurs because unconnected firms reduce their own job creation sharply in the face of unfair competition from connected firms. The chapter also describes how these effects were larger during the 2009 election year.

Keywords:   Politically connected firms, competition, job creation, cronyism, privileges, favoritism, Lebanon

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