Amr Adly, State Reform and Development in the Middle East: Turkey and Egypt in the Post-Liberalization Era. London and New York: Routledge, 2012.

Jadaliyya (J): What made you write this book?

Amr Adly (AA): The book is based on my PhD dissertation that I completed in September 2010 at the European University Institute in Florence. I specialized in political economy, and decided to write my thesis on the political economy of the Middle East in general, and Egypt in particular. My choice had to do with finding alternatives to culturalist approaches to studying the region, which usually focus on factors such as religion and identity politics. I hoped to contribute to the debate that my mentor, the late Samer Soliman, started some ten years ago with his influential book The Autumn of Dictatorship: Fiscal Crisis and Political Change in Egypt under Mubarak.

J: What particular topics, issues, and literatures does the book address?

AA: The book addresses the question of socioeconomic development in general, and the institutional and political determinants of development in particular. It contrasts the performance of two of the biggest economies in the region, Egypt and Turkey, in the aftermath of the adoption of neoliberal reforms. Accordingly, the book engages primarily with a very broad spectrum of academic literature, ranging from development studies, to the political economy of the Middle East, to the literature on rentierism, all the way to historical institutionalism and state reform.

The book compares Egypt and Turkey in the post-liberalization era. Both started from a very similar position in the global division of labor, being heavily dependent on raw-material exports. Whereas Turkey could successfully restructure its exports following the adoption of neoliberal measures in the early 1980s, Egypt couldn’t, despite the fact that both countries took similar policy-measures of trade and capital liberalization, privatization, and deregulation. Hence, the study argues that the divergence between the two cases can be explained through institutional reforms, not policy change. Turkey undertook institutional reforms in the areas of trade and industrial and investment-policy making and implementation, which made such restructuring possible. Egypt did not. So the study raises the question of how institutional reforms come about and the role of politics in economic change.

J: Who do you hope will read this book, and what sort of impact would you like it to have?

AA: The book is a work of academic research. However, some considerable effort has been made in order to render its language accessible to non-specialist readers who may be just interested in reading about the region and its political economy, or those who are interested in public policy and development in Turkey and Egypt. I definitely hope that the events of the last two years, and the sweeping socio-political changes that have been taking place in Egypt, as well as other countries in the region, will broaden the circle of interest for books such as this one and invite a larger audience.

J: What other projects are you working on now?

AA: I am currently working on a project at Stanford University on the future of entrepreneurship in Tunisia and Egypt. The focus of the study is the regulatory and institutional frameworks that have governed the private sector in these two countries and how are they likely to change following their respective revolutions.

J: How does your book contribute to and/or diverge from other scholarship on this subject?

AA: The literature on the political economy of the Middle East and the politics of development is quite meager, so there is always room for some contribution. I believe that the book contributes to the critique of neoliberalism and the neoliberal approach to development that has often seen it as an apolitical process that just has to do with unleashing the forces of the market. It brings the state and the political requirements of reforming it so as to harbor development back into the picture.

Excerpts from State Reform and Development in the Middle East: Turkey and Egypt in the Post-Liberalization Era

Neither statism nor neo-classicism can explain state reform in post-liberalization Turkey (1980-2010). The main critique of both schools is that politics does not exist in either tradition. Neo-classicism replaces politics with economics. Any state intervention would create rent havens and hence public good can solely be achieved the Smithean way through the invisible hand of the market, where economics is supposedly devoid of politics. This stance has been discredited by the recurrence of market failure and the rising awareness that the very market relations are embedded in institutional settings. 

Conversely, statists and neo-Weberians replace politics with rational and supposedly neutral administration. From this perspective, coherent and autonomous state institutions conduct actions that seek the public good and thus transcend the mere interests of the ruling incumbents and their allies. Not only does this line of thought echo the classical Weberian premise, which is idealistic and legalistic, that rational and insulated state bureaucracies can pursue public good in isolation of particularistic interests, but also it echoes Hegel’s metaphysical supposition of a state that stands above society and that is objectively capable of defining and pursuing the public good.

By raising the question of how state economic institutions come about and why they exist more abundantly in some states than others, politics can be brought back into the study of institutionalism. No sanctification of the state as the protector and promoter of public good is assumed. State actions may serve the interests of incumbents and their social allies, but in doing so they formulate and pursue some notion of public good that transcends their mere utilitarian instinct of self-serving and predation. The pursuit of the immediate interests of the ruling incumbents does not always imply asset-stripping, rent-seeking and state capture, because incumbents are obliged to meet some requirements for dominance and have to rear and sustain a social coalition. Accordingly, in pursuit of their immediate interests of power retention, incumbents may erect state institutions with developmental ends, such as export-restructuring and industrialization, among others.

The linking of state institution-building with the requirements of power retention gives a political explanation for the development of state institutional capacities as a means for survival and provides an analytical association between state formation and regime dynamics through exploring different dimensions of political power. Such an analysis transcends the constructed separation between public and private goods through demonstrating the power bases of the formation of any public good not as a transcendental ideal that develops beyond politics and power relations but as part and parcel of a broader political setting. Moreover, establishing an analytical link between rational self-interested incumbents and the pursuit of institution-building with developmental goals resonates with the tenets of modern constitutional political economy, as with the authors of the Federalist Papers, who were the first to elaborate how virtuous representation (the serving of public good) should be based on the assumption of rational self-oriented behavior, on what they called, “ambition.” The question then is how the immediate concerns of power retention are related to the longer-term process of institution building.

[…]

The contrast between the Turkish and Egyptian cases revealed that the Turkish incumbents had more incentives, autonomy and resources than their Egyptian counterparts to pursue state reform. Four principal factors stood out to explain the differential performance: intensity of political competition to keep office, state revenue bases, inherited state economic institutions from the ISI era and enabling external dynamics. The first three factors were decisive during the first period of study—Turkey (1980-2001) and Egypt (1990-2004)—while the fourth was the most important in the second period extending until 2010.

The political regime dynamics matters a lot in explaining the divergence between Turkey and Egypt. The intensity of political competition to which incumbents are exposed to keep office has been decisive in shaping their incentive to undertake state reform. In Turkey, following the brief military interregnum (1980-1983) and the reintroduction of party democracy in 1983 and 1987, respectively, the ruling incumbents pursued state escorting institution building as a means for power retention. The incumbents had to form electoral coalitions through assuming a distributional role that added to the fiscal burden on the state treasury in terms of an ever-widening budget deficit and a growing external debt stock. The maintaining of such coalitions amid increasing competition and contestation implied the necessity to generate and sustain export-led growth, to which state revenues and credit-worthiness were critically related.

Conversely, in Egypt, given the authoritarian character of the regime, limited venues of political competition rendered the ruling incumbents less pressured to deliver side-payments in order to mobilize active support. Passive support, or rather passive opposition, was required, combined of course with oppression. Instead of creating new constituencies to retain power, the Egyptian elites had only to appease the already-present constituencies of state patronage inherited from the Nasserist era. They could maintain their constituencies at a lower cost. Simultaneously, the incumbents could evade the economic and political cost of state reform, which could have alienated key and sizable regime constituencies such as public sector workers in troubled industries. 

[Excerpted from State Reform and Development in the Middle East: Turkey and Egypt in the Post-Liberalization Era, by Amr Adly, by permission of the author. © 2012 Amr Adly. For more information, or to purchase this book, click here.]