Abstract
Fiscal policy reforms are complicated. Empirical evidence suggests that in most countries of the Middle East the tax and tariff systems “remain complex, inefficient, and difficult to administer,” although some adjustments have been made in the wake of the financial crises of the late 1980s.1 But fiscal policy reforms are not only about reorganizing taxes and tariffs. Rather, they deal with more encompassing issues such as reducing the size of the state (“downsizing”), and restructuring various components of the state budget. Therefore, I regard expenditure reduction, privatization, and tax reform as major instruments supporting the goal of fiscal stability.2 In this broader understanding, fiscal policy reforms are highly subversive as the so-called IMF riots in the Middle East have shown.
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Notes
George T. Abed, “Trade Liberalization and Tax Reform in the Southern Mediterranean Region” (IMF Working Paper 98/49, Washington, 1998), 11.
According to Bangura, privatization “contributes to fiscal stability in two main ways. First, gains can be made on the expenditure side by withdrawing subsidies to loss-making companies and imposing hard budget constraints on the economic decisions of managers. … Second, the revenue derived from selling state enterprises to the public can help governments close their fiscal gaps”; Yusuf Bangura, “Public Sector Restructuring: The Institutional and Social Effects of Fiscal, Managerial and Capacity-Building Reforms” (UNRISD Occasional Paper No. 3, Geneva, 2000), 15.
I define economic elites rather pragmatically as the main or leading decision-makers in the field of economic activity and regulation. For a further discussion, including of important social and economic attributes of economic elites in Jordan, see Pamela Dougherty and Oliver Wils, “Between Public and Private: Economic Elite in Jordan,” in Ricardo Bocco, ed., The Hashemite Kingdom of Jordan, 1946–1996 Social Identities, Development Policies and State-Building (Paris: Karthala, forthcoming); Oliver Wils, “Private Sector Monopolies and Economic Reform in (Post) Rentier States. The Case of Jordan,” Asien Afrika Lateinamerika 28, no. 4 (2000): 365–397;
and Oliver Wils, Wirtschaftseliten und Reform in Jordanien: Zur Relevanz von Unternehmer-Bürokraten-Netzwerken in Entwicklungsprozessen (Hamburg: Deutsches Orient-Institut, 2003).
This definition given by Mitchell in 1969 is cited in Thomas Schweitzer, Muster sozialer Ordnung. Netzwerkanalyse als Fundament der Sozialethnologie (Berlin: Dietrich Reimer Verlag, 1996), 16;
see also Linton C. Freemann, “Social Network Analysis: Definition and History,” in A. E. Kazdan, ed., Encyclopedia of Psychology, vol. 6 (New York: Oxford University Press, 2000), 350–351.
Ira Katznelson, “Embeddedness Beyond Networks: Reflections on Sociology’s New Institutionalism” (unpublished draft, 1999), 25.
See Dirk Messner, Die Netzwerkgesellschaft. Wirtschaftliche Entwicklung und internationale Wettbewerbsfähigkeit als Probleme gesellschafilicher Steuerung (Köln: Weltforum Verlag, 1995);
see also Helmut Willke, Systemtheorie III: Steuerungstheorie (Stuttgart/Jena: Gustav Fischer Verlag, 1995).
Hermina Ibarra, “Structural Alignments, Individual Strategies, and Managerial Action: Elements Toward a Network Theory of Getting Things Done,” in Nitin Nohria and Robert G. Eccles, eds., Networks and Organizations: Structure, Form, and Action (Cambridge: Harvard Business School, 1992), 165–188.
For example, see J. Roger Hollingsworth, Philippe C. Schmitter, and Wolfgang Streeck, eds., Governing Capitalist Economies: Performance and Control of Economic Sectors (Oxford: Oxford University Press, 1994);
Colin Crouch and Wolfgang Streeck, eds., Political Economy of Modern Capitalism: Mapping Convergence and Diversity (London: Sage Publications, 1997).
Sylvia Maxfield and Ben Ross Schneider, eds., Business and the State in Developing Countries (Ithaca: Cornell University Press, 1997). According to Maxfield and Schneider, state—business collaboration that is marked by information, transparency, credibility, reciprocity, and trust is likely to contribute positively to economic growth. Regarding the second point, they argue that state—business collaboration is affected by state characteristics as well as the nature of business associations. An insulated and Weberian bureaucracy on the one hand and business associations that are either encompassing or able to monitor and sanction the behavior of their members on the other tend to inhibit temptations for rent seeking. And finally they state with reference to their third point that the reasons for time consuming and costly state—business collaboration are related to (perceived) economic or political threats or strong incentives for the production of goods requiring close cooperation. On business associations, also see
Richard F. Doner and Ben Ross Schneider, “Business Associations and Economic Development: Why Some Associations Contribute more than Others,” in Business and Politics 2, no. 3 (2000): 261–288.
For an overview on the different strands of New Institutionalism, see John Harriss, Janet Hunter, and Colin M. Lewis, eds., The New Institutional Economics and Third World Development (London: Roudedge, 1995);
Paul DiMaggio, “The New Institutionalism: Avenues of Collaboration,” Journal of Institutional and Theoretical Economics 154, no. 4 (1998): 696–705;
and Geoffrey M. Hodgson, “Institutional Economics: Surveying the ‘Old’ and the ‘New,’” Metroeconomica 44, no. 1 (1993): 1–28.
Gerhard Lehmbruch, “The Organization of Sociery, Administrative Strategies, and Policy Networks: Elements of a Developmental Theory of Interest Systems,” in Roland M. Czada and Adrienne Windhoff-Héritier, eds., Political Choice: Institutions, Rules, and the Limits of Rationality (Frankfurt/Main: Campus, 1991), 127.
See Hazem Beblawi and Giacomo Luciani, eds., The Rentier State (London: Croom Helm, 1987);
Claudia Schmid, Das Konzept des Rentier-Staates: Ein sozialwissenschaftliches Paradigma zur Analyse von Entwicklungsgesellschaften und seine Bedeutung für den Vorderen Orient (Münster: Lit-Verlag, 1991);
and, Peter Pawelka, “Staat, Bürgertum und Rente im Vorderen Orient,” Aus Politik und Zeitgeschichte 33 (1997): 3–11.
For a more critical view, see K. A. Chaudhry, The Price of Wealth: Economies and Institutions in the Middle East (Ithaca: Cornell University Press, 1997).
See Giacomo Luciani, “The Oil Rent, the Fiscal Crisis of the State and Democratization,” in Ghassan Salamé, ed., Democracy without Democrats? The Renewal of Politics in the Muslim World (London: I. B. Tauris, 1994), 130–155.
Even rentier economy approaches do not take state—business interactions into consideration seriously. Laurie Brand, e.g., noticed that the state participated in the circulation of remittances through the taxation of imports. However, the resulting networks between state officials and business families were not integrated into analysis; see Laurie A. Brand, Jordan’s Inter-Arab Relations: The Political Economy of Alliance Making (New York: Columbia University, 1994).
See Hartmut Elsenhans, Abhängiger Kapitalismus oder bürokratische Entwicklungsgesellschaft: Versuch über den Staat in der Dritten Welt (Frankfurt/ Main: Campus, 1981; English version: State, Class and Development, New Delhi/London/Columbia, MO: Radiant, Sangam, South Asia Books, 1996).
See Hartmut Elsenhans, “Integrating Political Economy in the Comparative Study of Administration,” in H. K. Asmeron and R. B. Jain, eds., Politics, Administration and Public Policy in Developing Countries: Examples from America, Asia and Latin America (Amsterdam: VU University Press, 1993), 16–36.
Abla M. Amawi, “The Consolidation of the Merchant Class in Transjordan during the Second World War,” in Eugen L. Rogan and Tariq Tell, eds., Village, Steppe and State: The Social Origins of Modern Jordan (London: British Academic Press, 1994), 162–186.
Others, such as ‘Abd al-Hamid Shuman, founder and chairman of the Arab Bank, managed to transfer their business to Jordan. According to the World Bank, it is estimated that JD 10 million of bank deposits were transferred and that refugees brought around the same amount of money with them, which altogether accounted for more than half of Jordan’s GNP; see International Bank for Reconstruction and Development (IBRD), The Economic Development of Jordan: Report of a Mission, organized by the International Bank for Reconstruction and Development at the request of the government of Jordan (Baltimore: John Hopkins Press, 1957), 45.
See Robert B. Satloff, From Abdullah to Hussein: Jordan in Transition (Oxford: Oxford University Press, 1994). Initially, the palace elite consisted mainly of the Hashemite family, some loyal Palestinians (such as Tawfiq Abu al-Huda and Samir al-Rifa‘i), and some co-opted tribal and minority group leaders (e.g., Christians and Circassians). The Jordanian/Bedouin element of the palace elite, although often referred to as the backbone of Hashemite rule, emerged only gradually;
see Shmuel Bar, “The Jordanian Elite—Change and Continuity,” in Asher Susser and Arveh Shmuelewitz, eds., The Hashemites in the Modern Arab World (London: Frank Cass, 1995), 221–228;
and Tariq Tell, “Les origines sociales de la glasnost jordanienne,” in R. Bocco and M. R. Djalili, eds., Moyen-Orient: Migrations, démocratisation et médiations (Paris/Geneva: PFUF/IUEHEI, 1994).
In 1962, al-Tall purged some 200 bureaucrats and transferred more than 400 others who were charged for corruption; see Paul Kingston, “Failing to Tip the Balance,” in Asher Susser, On Both Banks of the Jordan: A Political Biography of Wasfi Al Tall (London: Frank Cass, 1994).
E. Kanovsky, The Economy of Jordan: The Implications of Peace in the Middle East (Tel Aviv: University Publishing Projects, 1976), 7.
See Schirin H. Fathi, Jordan—An Invented Nation? Tribe-State Dynamics and the Formation of National Identity (Hamburg: Deutsches Orient-Institut, 1994).
Central Bank of Jordan, Special Issue on the Occasion of the Fifteenth Anniversary of the HKJ Independence: Yearly Statistical Series, 1964–1995 (Amman: CBJ, 1996).
Initially, expansion of the public sector came in response to the adverse effects of soaring oil prices. Inflation skyrocketed because of higher import prices and an increased money supply. This was accompanied by exploding land prices caused by speculation and, after 1975, the arrival of tens of thousands of Lebanese refugees fleeing the civil war. In some sections of Amman, land prices rose by as much as 1,000% in the span of one year. See Jawad Anani, “Adjustment and Development: The Case of Jordan,” in Adjustment Policies and Development Strategies in the Arab World, Said El-Naggar, ed., 131 (Washington DC: International Monetary Fund, 1987). In order to counterbalance the effects of inflation on the purchasing power of wages, the Ministry of Supply was established in 1974 and was given a monopoly over the import of basic foodstuffs and responsibility for setting the prices of other items. In 1975 the Civil Consumer Corporation was established to provide civil servants with goods at cost price. At the same time, the state began to expand its role through the provision of basic infrastructure and services, housing, and employment.
Timothy J. Piro, The Political Economy of Market Reform in Jordan (Lanham: Rowman and Littlefield, 1998), 66–67.
Marius Haas, Husseins Königreich: Jordaniens Stellung im Nahen Osten (München: Tuduv, 1975).
Frank Czichowski, Jordanien: Internationale Migration, wirtschaftliche Entwicklung und soziale Stabilität (Hamburg: Deutsches Orient-Institut, 1990).
Michel Chatelus, “Rentier or Producer Economy in the Middle East? The Jordanian Response,” in Adnan Badran and Bichara Khader, eds., The Economic Development of Jordan (London: Croom Helm, 1987), 214.
Rodney Wilson, “The Role of Commercial Banking in the Jordanian Economy,” in Adnan Badran and Bichara Khader, eds., The Economic Development of Jordan (London: Croom Helm, 1987), 48.
‘Abdallah al-Maliki, Al-mawsu‘a fi tarikh al-jihaz al-masrafi al-urdunni, vol. 1, Al-bank al-markazi al-urdunni wa al-siyasa al-naqdiyya (Amman: Al-urdunniyya li-l-tasmim wa al-taba’a, 1996), 138.
Edouard Maciejewski and Ahsan Mansur, eds., “Jordan: Strategy for Adjustment and Growth,” IMF Occasional Paper 136 (Washington DC: International Monetary Fund, 1996);
Pamela Dougherty, “The Pain of Adjustment Kerak’s Bread Riots as a Response to Jordan’s Continuing Economic Restructuring Programme: A General Overview,” Jordanies 2 (1996): 95–99.
Fahid al-Fanik, Barnamaj al-tashih al-iqtisadi, 1992–1998: ahdaf wa mubararat barnamaj al-in‘ash wa al-tashih li-l-iqtisad al-urdunni al-muttafiq ‘alayha sunduq al-naqd al-duwali (Amman: Mu’assasa Fahid al-Fanik, 1992), 46–48.
Katja Hermann, Aufbruch von Unten. Möglichkeiten und Grenzen von NGOs in Jordanien (Hamburg: Lit, 2000).
Renate Dieterich, Transformation oder Stagnation? Die jordanische Demokratisierungspolitik seit 1989 (Hamburg: Deutsches Orient-Institut, 1999);
Laurie A. Brand, “The Effects of the Peace Process on Political Liberalization in Jordan,” Journal of Palestine Studies 28, no. 2 (1999): 52–57.
Amman Chamber of Industry (ACI), Taqrir majlis al-idara li-‘am 1992 (Amman: ACI, 1993).
Pete W. Moore, “Business Associations, Politics, and Economics in Jordan,” paper presented at the annual MESA conference, Chicago (1998).
See Amman Chamber of Industry (ACI), Taqrir majlis al-idara li-‘am 1995 (Amman: ACI, 1996). It took quite some time until this agreement was put into practice. The ACI has demanded repeatedly to realize the tax exemptions with little success. Then in May 1998, it used the opportunity to lobby directly to King Hussein when he honored 99 founders and pioneers of the Jordanian industry (Rawad wa bunat al-sina‘ al-urdunniyya). Some weeks later, tax exemp-tions were realized, and new goods were added to the list of items that fell under the sales tax.
See Jean-Christophe Augé, “Das jordanische Hochschulwesen zwischen staatlichem Aufbau und Privatisierung,” INAMO 14 (1998): 14–17.
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Wils, O. (2004). From Negotiation to Rent Seeking, and Back? Patterns of State—Business Interaction and Fiscal Policy Reform in Jordan. 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_5
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