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All in the family : state capture in Tunisia (English)

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.

Details

  • Author

    Freund,Caroline, Nucifora,Antonio, Rijkers,Bob

  • Document Date

    2014/03/01

  • Document Type

    Policy Research Working Paper

  • Report Number

    WPS6810

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Tunisia,

  • Region

    Middle East and North Africa,

  • Disclosure Date

    2014/03/01

  • Disclosure Status

    Disclosed

  • Doc Name

    All in the family : state capture in Tunisia

  • Keywords

    European Bank for Reconstruction and Development;Trade & International Integration;entry regulation;Merger and Acquisitions;intensity of entry;firm size distribution;barrier to entry;balance sheet information;public choice theory;development research group;stock market capitalization;impact on competition;investment promotion agency;share of output;Rule of Law;types of regulation;limited administrative capacity;telecommunications and ict;labor force survey;high market power;regulated sectors;net profit;authorization requirement;entry restriction;profit distribution;political connections;fixed effect;business interest;aggregate market;investment code;air transport;largest firms;foreign ownership;descriptive statistic;aggregate performance;0 hypothesis;entry rate;robustness check;tax authority;tax authorities;regulatory capture;administrative datum;fiscal incentive;firm performance;high concentration;standard error;agricultural activity;state capture;Real estate;quantile regressions;gross profit;average profit;standard deviation;foreign investor;net private;private gain;investment regulation;disproportionate share;state intervention;average performance;market concentration;output market;registration requirement;turnover tax;cultural production;foreign equity;coffee shops;employment market;Corporate Law;customs regulation;international arbitration;explanatory variable;data limitation;Postal Services;macroeconomic perspective;fiscal advantage;firm level;expert judgment;export activity;international community;gross output;flat fee;exclusive suppliers;market failure;employment data;aggregate employment;output tax;employment distribution;tax inspector;coefficient estimate;special tax;aggregate outcome;medical laboratories;computer services;legal form;production facility;family ties;future research;development policy;stock portfolio;econometric method;social justice;quantitative information;International Trade;Job Creation;positive growth;Public Goods;special interest;competitive economy;investment legislation;research assistance;international economics;performance difference;foreign fund;public welfare;import tariff;business community;open access;potential abuse;Private School;anecdotal evidence;market structure;entrepreneurial ability;alternative hypothesis;excessive regulation;direct competition;positive coefficient;investment law;telecommunications company;current investment;high reward;restricted sector;greenfield investment;regression analysis;high entry;regulatory restriction;tobacco manufacturing;important share;market player;telecommunications sector;majority ownership;premium increases;joint product;average share;foreign competition;home market;domestic entrepreneur;privileged position;regulatory burden;family interest;film industry;road transport;aggregate output;profitable sector;

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Citation

Freund,Caroline Nucifora,Antonio Rijkers,Bob

All in the family : state capture in Tunisia (English). Policy Research working paper,no. WPS 6810 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/440461468173649062/All-in-the-family-state-capture-in-Tunisia