Business, Management and Accounting
6 years ago

Cronyism stifles innovation, hindering long-term economic growth in Egypt.

World Bank, Washington, DC eBooks
Do Politically Connected Firms Innovate, Contributing to Long-Term Economic Growth?
David Francis, Sahar Sajjad Hussain, Marc Schiffbauer

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Cronyism in Egypt hinders economic growth by discouraging firms from innovating. Politically connected firms invest less in new products compared to unconnected firms. Connected firms benefit from policy privileges like subsidies and contracts, making them more capital intensive. These privileges divert resources from innovation to favoring a few large, connected firms, ultimately reducing Egypt's long-term growth potential.