Book review on B. L. Glasser: Economic Development and Political Reform - The Impact of External Capital on the Middle East

Central European University

Bradley Louis Glasser: Economic Development and Political Reform - 
The Impact of External Capital on the Middle East, 
Cheltenham: Edward Elgar, 2001, 147 pp., ISBN 1 85898 9272.

Book review by 

Maximilian Spinner

Oil seems to prevent the development of democracy and a free market economy. Oil-rich countries as diverse as Nigeria, Saudi-Arabia, Irak, Iran, Venezuela or Azerbaijan appear to be among the least democratic countries with highly closed economies and little signs of change in their course. This assumption can be confirmed by the empirical correlation between low indices in democratic rule and in the openness of the economy, and the endowment with natural resources. Intuitively everybody could explain that in each of these countries a narrow elite can keep up this state due to almost unlimited and unconditional cash inflows compensating for ineffective economic structures and buying off the population with populist policies in subsidizing consumption or low taxation.

In his book Economic Development and Political Reform - The Impact of External Capital on the Middle East Bradley Louis Glasser puts the development of Middle Eastern states with different degrees of resource endowment into a broader perspective. Economic liberalization and democratization are explained in the context of external capital contributing to both economic development theories and transitology.

Glasser focuses on the developments in four countries: Turkey, Morocco, Egypt and Kuwait with their different degrees of external revenues. The author tries to explain why countries lacking exogenous revenues decided to reform their economies and to introduce democratic parliamentarism and how these objectives were being pursued in contrast to revenue-rich countries and their strategies to keep the status quo. Moreover, he looks at the nature of external revenues, including foreign aid, in shaping domestic coalitions for or against reforms. In this respect Glasser extends the framework of the existing literature on the ‘rentier state’¹ in establishing testable hypotheses about the mechanisms and causal links between the quantity and quality of external revenues and domestic political and economic reforms. Moreover, he challenges the emphasis of most transitological theories on elite agency which neglects the role of macro-structural factors.²

Glasser claims that the amount, the stability of flows and the degree of conditionality attached to external revenues influence the domestic strategies of ruling elites. Shrinking, volatile or conditional revenues make political leaders seek to build domestic coalitions with liberal or centre-right business elites to broaden their legitimacy to put through neo-liberal economic reforms, usually involving the establishment of (semi-)democratic parliaments. Moreover, politically privileging and strengthening these social groups, e.g. through favourable voting systems and reversing earlier discrimination, ensures better access to international capital. States profiting from unlimited and unconditional exogenous windfalls in turn attempt to keep the status quo, increase statism and populist tendencies, often also through mechanisms of manipulating electoral systems and preferential treatment of lower classes. Thus, Glasser claims, not only the vigor of reform policies but also the configuration of parliamentary coalitions in the respective countries is influenced by exogenous revenues following a regional pattern. Moreover, he turns attention to the impact of foreign aid as another important component of external revenue and its possibly negative impact on reform.

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1 E.g. Alan Richards / John Waterbury (1990): A Political Economy of the Middle East: State, Class and Economic Development, Boulder: Westview Press.

2 E.g. the celebrated study of Guillermo O’Donnell, Philippe Schmitter and Laurence Whitehead (1986), Transitions from Authoritarian Rule, Baltimore: John Hopkins University Press.