Political Succession, Crony Capitalism, and Economic Development in Syria

• In Event: New Lenses on Political Economy in the Middle East

Abstract

How do political successions and intra-regime transitions affect economic policy? Much of the recent literature on the political determinants of economic performance has relied on institutional explanations. This paper presents a theoretical framework that, while rooted in institutional and structural factors, considers how the identities of core regime supporters influence policy. It is argued that, in the absence of judicial independence to protect property rights and democratic institutions, leadership that is more closely tied to economic elites will produce poor economic outcomes. The succession from Hafez to Bashar Al-Assad in Syria in 2000 is subsequently explored to examine how a shift from a leader closely tied to the political and military apparatuses to one more closely connected to the economic elites might impact economic performance. Utilizing nighttime light data to proxy for economic development from 1992 – 2013, this initial empirical analysis examines divergences in governorate-level economic development from predicted levels of development based on various economic indicators utilized to estimate growth in development had the succession not occurred. The pseudo-liberalization undertaken in the aftermath of the succession appears to have produced a general malaise in the Syrian economy, there was some heterogeneity in the outcomes experienced by different regions. While the governorate of Deir Ezzor appears to have paid a heavy toll during this decade, much of this appears to be due to trends that began prior to the transition. Surprisingly, the shift from Hafez to Bashar Al-Assad appears to have consistently negatively impacted Western or “productive” Syria. The estimates noted above were then subsequently used to construct the dependent variable in an examination of the effects of investment on economic development at the governorate-year level for the years 2002-2011. This paper offers insights into how intra-regime transitions in leadership may have significant consequences for determining where resources are allocated by a state and how that may influence economic performance.

Author

• Ammar Shamaileh, Doha Institute for Graduate Studies