Crony Capitalism A conceptual analysis of its academic use, leading to a new definition and a roadmap for further research Master thesis Political Science Track: Political Economy Emma van Veenen 10645993 29 June 2018 Supervisor: Dr. Farid Boussaid Second reader: Dr. Paul Raekstad Abstract Crony capitalism is used in the academic literature to explain two major events of the last three decades: the Asian financial crisis of 1997 and the Arab uprising of 2011. This while there is almost no theoretical foundation of the concept. Hence, it is not clear what the research on crony capitalism actually is investigating. This thesis offers a start for solving this problem by answering the question: What is crony capitalism and how can it be properly researched? The method that is employed to answer this question is conceptual analysis. First, the academic use of crony capitalism is analyzed. Second, the theory of Aligica and Tarko (2012, 2014), the first who offer a theory of crony capitalism, is tested and found to be inadequate to describe the academic use of crony capitalism. Lastly, a new definition of crony capitalism and a roadmap for further research are proposed. Keywords: Crony capitalism, Corruption, Rent-seeking, Conceptual Analysis, the Middle East and North Africa, Asia 1 Table of Contents List of figures .......................................................................................................................................... 4 List of tables ............................................................................................................................................ 4 List of textboxes ...................................................................................................................................... 4 List of abbreviations ................................................................................................................................ 4 Introduction ........................................................................................................................................... 5 1. Theory and Method ....................................................................................................................... 8 1.1 Theoretical framework .................................................................................................................. 8 1.2 Methodology and source selection .............................................................................................. 10 1.2.1 Methodology ........................................................................................................................ 10 1.2.2 Sources ................................................................................................................................. 11 1.3 Method ........................................................................................................................................ 12 1.3.1 Analysis of academic use of crony capitalism ...................................................................... 13 1.3.2 Evaluation of the theory of Aligica and Tarko ..................................................................... 14 1.4 Conclusion ................................................................................................................................... 15 2. First definitions of crony capitalism .............................................................................................. 16 2.1 Original definition Crony Capitalism .......................................................................................... 16 2.2 Crony capitalism and Cronyism .................................................................................................. 17 2.3 Related concepts: Rent-seeking and Corruption ......................................................................... 18 2.3.1 Rent-seeking ......................................................................................................................... 19 2.3.2 Corruption ............................................................................................................................ 20 2.4 Conclusion ................................................................................................................................... 21 3. The academic use of crony capitalism ........................................................................................... 22 3.1 Use of crony capitalism in titles, subheadings and keywords ..................................................... 22 3.2 Definitions of crony capitalism in academic work ...................................................................... 23 3.2.1 Definitions of crony capitalism in Asia & the MENA region .............................................. 24 3.2.2 Other definitions ................................................................................................................... 25 3.3 Different operationalizations of crony capitalism ....................................................................... 26 3.3.1 Operationalization of crony capitalism in Asia .................................................................... 26 3.3.2 Operationalizations of crony capitalism in the MENA region ............................................. 28 3.3.3 Other interesting operationalizations of crony capitalism. ................................................... 29 3.4 Word count .................................................................................................................................. 30 3.5 Conclusion ................................................................................................................................... 32 4. Testing the theory of Aligica & Tarko ........................................................................................... 33 4.1 Definition of crony capitalism by Aligica and Tarko .................................................................. 33 4.2 Testing the theory by testing the definition ................................................................................. 37 4.2.1 Populist politics .................................................................................................................... 37 2 4.2.2 Rent-seeking ......................................................................................................................... 38 4.2.3 Barriers to entry .................................................................................................................... 39 4.2.4 Corruption ............................................................................................................................ 40 4.3 Conclusion ................................................................................................................................... 41 5. A refined definition of crony capitalism ........................................................................................ 42 5.1 Crony capitalism, a definition ..................................................................................................... 42 5.1.1 A political economic system ................................................................................................ 42 5.1.2 The necessary conditions ...................................................................................................... 43 5.1.3 Expressions of crony capitalism ........................................................................................... 44 5.1.4 A new definition of crony capitalism ................................................................................... 45 5.2 Alternative labels ......................................................................................................................... 46 5.2.1 Against crony capitalism as a label ...................................................................................... 46 5.2.2 Patrimonial capitalism .......................................................................................................... 47 5.3 Conclusion ................................................................................................................................... 49 6. Further research on crony capitalism ........................................................................................... 51 6.1 Critique on the conceptualization of crony capitalism as PCFs .................................................. 51 6.2 Considerations in researching crony capitalism .......................................................................... 53 6.3 Region-specific conceptualizations of crony capitalism ............................................................. 55 6.3.1 Family ................................................................................................................................... 55 6.3.2 Elite/Class ............................................................................................................................. 56 6.3.3 Conceptualizations of crony capitalism for Asia and the MENA region ............................. 57 6.4 Operationalizing crony capitalism ............................................................................................... 59 6.5 Conclusion ................................................................................................................................... 60 Conclusion ...........................................................................................................................................