POLI SCI 351 Lecture Notes - Lecture 4: 1973 Oil Crisis, Crony Capitalism, Infitah
Political Economy
• Intersection of contests/struggles over resources and authority]
Types of Political Economies
• Production / extractive state
o Role of state in terms of economy is to foster economic development and
growth
▪ Most countries in the world (create growth, employment, taxes)
• Rentier / allocative state (Middle East)
o Doesn’t try to create wealth, major role is to distribute / allocate the
natural wealth of the country (wealth not due to productivity, but to lucky
location --- oil)
o Distribute rents (income not from productive activity)
o Spectrum of rentierism
Production States
• 1960’s/70s state-led development
• Import substitution industrialization (ISI)
o Goals: development and independence
▪ Local production, protection
▪ Populist promise: end exploitation, improve lives
o Reality:
▪ Political logic > economic utility
▪ States > markets
▪ Redistribution > growth
▪ Waste, unemployment, debt
• Public enterprises unprofitable
• Inflated public employment unsustainable
Structural adjustment
• 80s/90s -> free market; “Washington Consensus”
• International Money Fund conditionality
o Target inefficiencies
o Increase private enterprise
• Stages:
o Stabilization
▪ Reduce expenditures and subsidies
o Reform
▪ Privatization
• Political significance: revise state/society bargain
o Impetus to some political liberalization
Politics of neo-liberalism: Case of Egypt
• Pres. Anwar Sadat: Infitah (mid 1970s)
o Private sector, foreign investment, dismantle some welfare
o 1977 cut subsidies
▪ Bread riots
▪ What would you do?
▪ Similar protests in other countries
o Populist legacy difficult to undo
▪ Weigh economic and political costs
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