Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: Proponents of globalization argue that market-oriented reforms enable business leaders to push interventionist, authoritarian governments to relax economic and political restrictions. Business elites launched to new prominence by participation in global markets will push for economic liberalization, transparency and the rule of law. But do business leaders conform to these expectations? This paper develops an analytical framework based on a typology of “protected” and “semi-open” developing economies to explain how globalization affects business politics. The argument holds that new incentives from integration in the global economy interact with varied institutional legacies in these two types of systems to produce distinct prospects for business mobilization and, ultimately, broader political and economic change. In protected economies, new export-oriented business factions organize themselves in opposition to an established, protectionist economic elite, which long monopolized economic opportunities. Reactive cycles of mobilization between the two groups spur the creation of well-structured business lobbies that push for greater transparency in business-government relations and become active partners in national development efforts. In semi-open economies, where a small domestically-oriented industrial class is not very influential and has coexisted with exporters for years, economic liberalization engenders far less pronounced domestic struggles. As a result, business groups do not mobilize extensively and, thus, do not compel significant shifts in business-government relations. Paradoxically, protected economies start off more insulated from the global economy than semi-open economies but are more likely to breed forceful pro-liberalization constituencies once economic liberalization takes root. To support my general argument about globalization and business politics, I provide a comparative study of two developing economies in the Middle East – Morocco, an example of a protected economy, and Tunisia, an example of a semi-open economy – using paired comparisons of the textile and apparel sectors.