All in the Family: State Capture in Tunisia

51 Pages Posted: 20 Apr 2016  

Bob Rijkers

World Bank

Caroline L. Freund

World Bank - Macro, Trade and Investment

Antonio Nucifora

World Bank - Africa Region

Date Written: March 1, 2014

Abstract

This paper examines the relationship between entry regulation and the business interests of former President Ben Ali's family using firm-level data from Tunisia. Connected firms account for a disproportionate share of aggregate employment, output and profits, especially in sectors subject to authorization and restrictions on FDI. Quantile regressions show that profit and market share premia from being connected increase along the firm-size distribution, especially in highly regulated sectors. These patterns are partly explained by Ben Ali's relatives sorting into the most profitable sectors. The market shares of connected firms are positively correlated with exit and concentration rates in highly regulated sectors. Although causality is difficult to establish, the results are consistent with the hypothesis that the Ben Ali clan abused entry regulation for private gain at the expense of reduced competition.

Keywords: Investment and Investment Climate, Debt Markets, Transport Economics Policy & Planning, Microfinance, Emerging Markets

Suggested Citation

Rijkers, Bob and Freund, Caroline L. and Nucifora, Antonio, All in the Family: State Capture in Tunisia (March 1, 2014). World Bank Policy Research Working Paper No. 6810. Available at SSRN: https://ssrn.com/abstract=2415016

Bob Rijkers (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Caroline L. Freund

World Bank - Macro, Trade and Investment ( email )

1818 H Street, N.W.
MC3-329
Washington, DC 20433
United States
(202)458-0847 (Phone)

HOME PAGE: http://econ.worldbank.org/staff/cfreund

Antonio Nucifora

World Bank - Africa Region ( email )

1818 H Street
Washington, DC 20433
United States

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