Abstract
In virtually all developing countries,1 and beyond,2 relations between the state and business have taken the form of economic or policy networks that may or may not operate through formal institutions. Though networks are ubiquitous in nearly all settings where state and business cooperate, their impact on economic growth and development can be more or less detrimental or positive depending on the conditions of their emergence, their internal dynamics, and their relation to the broader institutional and social context.3 This chapter posits that the effects of the maturing economic net-works—combining capitalists and bureaucrats—in Syria in the late 1980s became extant in the economic, regulatory, and fiscal policy reforms of the late 1980s and the 1990s. The foreign exchange crisis of 1986 marks the acceleration of economic networks’ consolidation and influence, albeit at an informal level, until 1991 when these networks hijacked the official institutional expression of the “private sector” under the rubric of the government’s reform policy, that is, al-ta`adudiyya al-iqtisadiyya (economic pluralism). The role of privileged economic networks4 in bringing about economic and fiscal change can be analyzed by examining the institutional and social context within which these networks emerge and on which their sustenance rests. Although the impact of such networks has been largely limited to middle-and lower-range policies, their ability to bypass or manipulate laws and regulations has significantly widened their reach and allowed them, intentionally or inadvertently, to shape general developmental change in idiosyncratic ways that were detrimental to economic productivity.5
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Notes
On economic or policy networks, or alternatively, on distributional coalitions, see Andrew W. Buck, “Networks of Governance and Privatization: A View from Provincial Russia,” in Diane E. Davis, ed., Political Power and Social Theory (JAI Press: Stamford, CT, 1999)
and Hector E. Schamis, “Distributional Coalitions and the Politics of Economic Reform in Latin America,” World Politics 51 (January 1999): 236–268.
See for instance, Edward H. Lorenz, “Neither Friends nor Strangers: Informal Networks of Subcontracting in French Industry,” in Diego Gambetta, ed., Trust: Making and Breaking Cooperative Relations (New York: Basil Blackwell, 1988), 194–210;
and Philippe C. Schmirter and Wolfgang Streeck, “Community, Market, State and Associations? The Prospective Contribution of Interest Governance to Social Order,” in Graham Thompson, Jennifer Frances, Rosalind Levacic, and Jeremy Mitchell, eds., Markets, Hierarchies, and Networks: The Coordination of Social Life (London: Sage Publications, 1991), 227–241.
For an introduction to network analysis, see David Knoke and James H. Kuldinski, “Network Analysis: Basic Concepts,” in Graham Thompson, Jennifer Frances, Rosalind Levacic, and Jeremy Mitchell, eds., Markets, Hierarchies, and Networks: The Coordination of Social Life (London: Sage Publications, 1991), 173–182.
For empirically grounded research on network analysis, see Paul Dimaggio, “Nadel’s Paradox Revisited: Relational and Cultural Aspects of Organizational Structure,” in Robert G. Eccles and Nitin Nohria, eds., Networks and Organizations: Structure, Form, and Action (Boston: Harvard Business School Press, 1992), 118–142;
and Mustafa Emirbayer and Jeff Goodwin, “Network Analysis, Culture, and the Problem Agency,” American journal of Sociology 99, no. 6 (1994): 1411–1454.
See Raymond Hinnebusch, “Democratization in the Middle East: The Evidence from the Syrian Case,” in Gerd Nonneman, ed., Political and Economic Liberalization: Dynamics and Linkages in Comparative Perspective (London: Lynne Rienner Publishers, 1996), 163–164.
See Steven Heydemann, Authoritarianism in Syria: Institutions and Social Conflict, 1946–1970 (Ithaca, NY: Cornell University Press, 1999), 85.
See David Marsh and Martin Smith, “Understanding Policy Networks: Towards a Dialectical Approach,” in which they emphasize the dialectical interaction between network and context, in Political Studies 48 (2000): 421.
See Hanna Batatu, Syria’s Peasantry, the Descendants of Its Lesser Rural Notables, and Their Politics (Princeton, NJ: Princeton University Press, 1999), 208.
See Volker Perthes, The Political Economy of Syria Under Asad (London: I.B. Tauris, 1998), 49–53.
See Steven Heydemann, “Taxation Without Representation,” in Ellis Goldberg and Joel Migdal, eds., Rules and Rights in the Middle East (University of Washington Press, 1993).
Oliver Williamson, “Calculativeness, Trust, and Economic Organization,” Journal of Law and Economics 36 (April 1993): 453–502.
This conceptualization captures the common denominator among various schools of thought on the emergence of institutions. The difference rests on the actual purpose. More pertinent to this study is the sociopolitical factor that motivated the concerned elites. This does not mean that transaction costs were not considered, as the new institutional economists (NIE) would advance. Simply, transaction costs are determined based on a more sociological and historical calculation that involves a number of social, economic, and political factors. These factors have been the subject of preceding chapters. Thus, an eclectic approach that combines historical, sociological, and rational choice institutionalism serves this study best. As the following makes more apparent, the task is to discern when the logic of consequences dominates behavior (i.e., the basis of rational choice new institutionalism) and when the logic of appropriateness dominates behavior (i.e., the basis of historical and sociological new institutionalism). See Elinor Ostrom, “Rational Choice Theory and Institutional Analysis: Toward Complementarity,” American Political Science Review 85, no. 1 (March 1991): 238–243;
and Peter A. Hall and Rosemary C. R. Taylor, “Political Science and the Three Institutionalisms,” Political Studies 44 (1996): 936–957.
For transaction cost institutionalism, see Douglass C. North, Institutions, Institutional Change and Economic Performance (Cambridge: Cambridge University Press, 1990).
See Henry Farrell and Jack Knight, “Trust, Institutions, and Institutional Evolution: Industrial Districts and the Social Capital Hypothesis,” unpublished paper, 2001.
See `Arif Dalila, “The Public Sector and Its Role in Development” [al-Qita`al-`Amm wa Dawrahu fi al-Tanmiya], Paper No. 3, 1986 Conference Series (Damascus: Economic Sciences Association, 1986).
See Leonard Robinson, “Elite Cohesion, Regime Succession and Political Instabiliry in Syria,” Middle East Poliry 5, no. 4 (January 1998).
For an updated account, see Muhammad al-Jlailati, “The Syrian Tax System and Avenues for Its Reform” [al-Nizam al-Daribi al-Suri wa-Ittijahat Islahihi], Paper No. 7, 2000 Conference Series (Damascus: Economic Sciences Association, March 2, 1999).
See Raslan Khadour, “The Economic Effects of Administrative Corruption” [al-Athar al-igtisadiyya lil-fasad al-idari], Paper no. 2, 1999 Conference Series (Damascus: Economic Sciences Association, February 23, 1999).
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Haddad, B. (2004). The Formation and Development of Economic Networks in Syria: Implications for Economic and Fiscal Reforms, 1986–2000. In: Heydemann, S. (eds) Networks of Privilege in the Middle East: The Politics of Economic Reform Revisited. Palgrave Macmillan, New York. https://doi.org/10.1057/9781403982148_2
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DOI: https://doi.org/10.1057/9781403982148_2
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