All in the Family : State Capture in Tunisia
This paper examines the relationship between regulation and the business interests of President Ben Ali and his family, using firm-level data from Tunisia for 1994-2010. Data on investment regulations are merged with balance sheet and firm-level ce...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/03/19291754/all-family-state-capture-tunisia http://hdl.handle.net/10986/17726 |
| Summary: | This paper examines the relationship
between regulation and the business interests of President
Ben Ali and his family, using firm-level data from Tunisia
for 1994-2010. Data on investment regulations are merged
with balance sheet and firm-level census data in which 220
firms owned by the Ben Ali family are identified. These
connected firms outperform their competitors in terms of
employment, output, market share, profits, and growth and
sectors in which they are active are disproportionately
subject to authorization requirements and restriction on
foreign direct investment. Consistent with theories of
capture, performance differences between connected firms and
their peers are significantly larger in highly regulated
sectors. In addition, the introduction of new foreign direct
investment restrictions and authorization requirements in
narrowly defined five-digit sectors is correlated with the
presence of connected firms and with their startup,
suggesting that regulation is endogenous to state capture.
The evidence implies that Tunisia's industrial policy
was used as a vehicle for rent creation for the president
and his family. |
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