When Cheap is Costly: Rent Decline, Regime Survival and State Reform in Mubarak's Egypt (1990-2009)

It has been held that external rents significantly affect the formation of state institutional capacities as constant flows of rents tend to weaken the capacity to regulate, monitor and restructure the economy. This gives rise to the formulation of a question in reverse: would a steady and consistent decline in rents instigate state capacity building? This study argues that the impact of rent decline on capacity building is politically mediated by the institutional features of the ruling regime which determine the extent to which dwindling rents adversely affect the incumbents' chances of political survival. In Mubarak's Egypt, the ruling incumbents could survive with less rent by resorting to more repression and curtailing political participation and could thus evade the cost of state reform. In that setting, cheap regime survival proved to be quite costly for the overall economy.