My paper examines the effects of oil wealth on the institutions that shape the national business environment and opportunities for domestic entrepreneurs. Using techniques in Bayesian statistics, I first find that countries who are dependent on oil and fuel-related exports tend to provide worse institutions for credit lending and market entry for entrepreneurs in industrial and commercial sectors. I develop a number of hypotheses to explain these empirical findings that look to the incentives of political elites to support institutional reform in areas beyond the resource sector and concerning non-elite business groups. I also examine the role of time horizons and argue that when political elites have longer time horizons due to enhanced political stability they are more likely to support reform of these institutions and make more efforts to foster entrepreneurship in society. I compare the cases of Iran and Saudi Arabia since the 1950s to show in greater detail how these state-business dynamics emerge and how divergent outcomes often emerge in oil states in regard to the institutions that guide entrepreneurs.

Beyond the rentier State: questions of path dependency The case of post-1990 Egypt The rentier State literature suggested broad economic and political implications for the State dependency on rents. Economically, Dutch disease-like effects were perceived to hinder the development of productive sectors in the economy (Abdelkhalek 2001), as States become increasingly disinterested in extending productive bases for their revenues. Politically, rentier characters of the State were linked to authoritarianism (Bellin 2004, Lucciani and Beblawi 1987). In a nutshell, the rentier State has been rather an incarnation of a "resource curse" that entraps developing States and economies into a low-low equilibrium either economically or politically. Accordingly, the decline of the share of rents in State revenues as well as in total GDP was viewed to revive the motivation for the cultivation of productive revenue bases for the State dependent on broader economic growth. However, it has been empirically observed that States that suffered from constant decline of rents due to depleted oil reserves and geo-political changes, such as Egypt since the 1990s, have had considerable problems of adjustment the generation of more productive bases of economic growth and consequently of State revenues. I argue along the line of Karl (1997) that not only does rentierism define the nature of the economy and the ruling regimes, but also it defines the institutional capacities of the State creating a path dependency. Hence, rentier States suffering from depleted rents have to tackle a whole legacy of institutions that constrain (or enable) the attempts to shift into better developmental trajectories. I claim that Egypt since the early 1990s has been showing the above mentioned path dependency. Despite the constantly declining shares of rents in total State revenues and GDP since early 1990s (Soliman 2005), the capacity of the State to diversify exports away from oil, and shift into tax revenue bases have rather met limited success. In this study, I aim at tracing the evolution of Egyptian State institutions operating in the fields of industry and trade on the one hand, and those of finance on the other throughout the 1990s and till currently.

This paper tracks the evolution in two dimensions of human development, namely health and education in Iraq, 1960 to 1990. In evaluating the growth of various indicators (e.g. life expectancy, literacy and school enrollment rates), tentative conclusions are made; the pattern of growth in the indicators is found to somewhat uneven. Changes in public policy (largely responsible for improvements in health and education) are consequently studied. The resulting discussion contests some fundamental assumptions regarding the resource curse—the notion that oil income necessarily stifles growth and development in the goods producing sectors of manufacturing and agriculture. The discussion also casts doubt on a main tenet of the rentier state paradigm: the notion that oil income works to immunize oil-producing states from social pressures or at least enhance the state’s maneuverability in respect to its citizenry.

Compared to many of her counterparts, which adopted very similar developmentalist models during their Import Substituting Industrialization periods, and started the privatization adventure at similar development levels, Turkey’s two decade experience with privatization was extraordinarily protracted. Only by the turn of the century did the course of Turkey’s exceptionally delayed privatization begin to change, following severe economic and political crises. Against this background, the paper revisits the debate regarding the place and role of the state in economy and society, in a distinctive historical juncture when the shift from a state-directed economic model to a liberalized market-economy disrupts, dissolves and recasts existing relationships between social groups and the state at various stages of economic transformation in Turkey since the 1980s. In this respect, the paper demonstrates three definitive moments in Turkey in regards to the course of instituting economic liberalism and accomplishing successful privatizations: First, the anti-privatization discourse in Turkey was empowered by a strong nationalist ideology which defined an encompassing and passionate state-building, nation-making and bourgeoisie-creating project under strong state tutelage since the inception of the Republic. As such, opposition to privatization was never a simple counter-positioning to a new economic strategy that has been put in effect since the early 1980s, but a recent reincarnation of a deeper ideological position in defense of a statist outlook informed by defensive nationalism. Second, the changing trajectory of privatization after 2000 towards an astonishing level was not solely a consequence of favorable domestic and international economic conditions, but rather was a symptom of the increasing penetration of the neoliberal ideology which weakened statist discourses and the national development outlook in Turkey. It was at an historical juncture when this ideology found recipients among those political elite who for various reasons had long been in conflict with the existing configuration of the state and the interpretation of statism, and implemented the requirements of the new economic order more enthusiastically and successfully than previous political groups. Finally, despite what can be described as a miraculous achievement in privatization attempts in recent years, marginalized oppositional groups could still distort the outcomes of the process, by ensuring that most privatizations resulted with the victory of the national capital against international investors. In that sense, the long historical legacy of the ideological struggle colored with strong nationalist sentiments continued to empower oppositional groups in their effort to resist economic and social transformation in Turkey.

The theory of crony capitalism tells us that when the private sector is dependent on the government, the ruling elite can decide who gets deals and who prospers. This ensures the ruling elite’s hold on power by creating private-sector networks that revolve around them, like spokes of a wheel. Dependency of the business class on the rulers helps to remove an otherwise potentially serious threat of regime change. Crony capitalism is only possible when there is not a lot of competition and conflict within the private sector, which allows the rulers to adjudicate between groups with great flexibility. However, as the economy grows, the ruling elite finds the private sector harder to control, and adjudication between competing national groups becomes a lose-lose situation for those in power. This was exemplified in the competition over the second telecommunications license in Saudi Arabia in 2004, where ten of eleven groups in competition each employed a different prince to make their case to the rulers. In the end, the group without a prince got the contract, showing that the ruling family felt constrained by the competing interests within its own power base and did not feel comfortable showing favoritism to any particular faction. Once the situation becomes lose-lose, the rulers end up being forced to create an objective and transparent process to adjudicate private sector competitions, which imposes constraints on their own behavior and may lead to increased regulation and transparency elsewhere in the government. By applying the theory of crony capitalism to the GCC states, I seek to explain the puzzling relationship between the autocratic governments and the expanding private sectors. What insights can we glean from the lens of crony capitalism? What explains the variance we see in the different countries of the Gulf? My study encompasses all six GCC states, with two qualitative case studies providing a special emphasis on Bahrain and Qatar. Through in-depth field research, including interviews with leading business families in the two countries, I document the conditions under which we have seen regulation evolve in the GCC countries, and what this evolution may mean for the economic and political future of these regimes. As I am currently in the region conducting this fieldwork, I hope to present my work and receive feedback from my colleagues at the annual MESA conference in Boston this November.