The Political Economy of Trade and Industrialization: Turkey and Egypt in the post-liberalization era

Abstract

How do state economic institutions come about? And why do developing countries give different accounts of state institution-building? This study argues that state economic institution-building is a function of the ruling incumbents’ motives and scope conditions. Motives refer to the incumbents’ identification of state institutionbuilding with their immediate and direct interest of political survival in office. Meanwhile, scope conditions refer to the enabling or constraining factors that the incumbents confront in pursuit of reform which either supplement or limit their autonomy and resources. The study examines the cases of Turkey and Egypt following the embarking on economic liberalization in 1980 and 1990 respectively. On the one hand, Turkey witnessed considerable institution-building in export-related policy and regulation areas with remarkable implications for export expansion and restructuring from raw materials into manufactured products. Conversely, postliberalization Egypt suffered from institutional stagnation associated with a poor export performance and persistent dependency on oil exports. The claim is that Turkish incumbents have been more motivated and enabled to undertake encompassing institutional reforms with the aim of export expansion restricting than their Egyptian counterparts.