Amr Adly talks about his latest book, Cleft Capitalism: The Social Origins of Failed Market Making in Egypt, with Marc Lynch on this week’s podcast. The book explores why market-based economic development failed to meet expectations in Egypt.
“The main argument is that we have three business systems in Egypt in reference to rules formal as well as informal and mixes of the two, according to which different business establishments have been operating. And the crucial thing really is how their access to physical and financial capital has been regulated.”
“The main point here is that the vast majority of private establishments, the ones that are strictly owned by private individuals, have suffered from a chronic under structuring under capitalization when it comes to access to back credit given of course the structure of the financial system in Egypt, which is very much bank-based, as well as access to land.”
“One of the problems here is that you have a banking system in Egypt that is still very much controlled by the state. You have very large state-owned banks that still hold up something between one-third and forty percent of the total assets of the banking system. Despite rounds of privatization and liberalization and even without this crucial factor of the direct state ownership of the big banks, you have state regulation that is both formal as well as informal. All of these networks that have historically tied state-owned enterprises and then later on private businesses that are like crony businessmen that have been related to the successive ruling regimes in Egypt, all of these have created a regulatory environment that made it extremely hard for those who lack either initial capital or political and social capital.
Amr Adly is an assistant professor in the department of political science at The American University in Cairo. He worked as a non-resident scholar at the Carnegie Middle East Center. He has also worked as a project manager at the Center on Democracy, Development, and the Rule of Law at Stanford University, where he was a postdoctoral fellow. Adly received his Ph.D. from the European University Institute in Florence. He is also the author of State Reform and Development in the Middle East: The Cases of Turkey and Egypt (Routledge, 2012).