Research framework and broader academic knowledge base
Serbia: documented application of the same framework
How does a private company become dependent on the government's goodwill?
A private company becomes politically dependent when its contract, license, tax treatment, credit or even property security no longer depend on the foreseeable rule, but on the relationship with the government. The owner then knows that supporting an independent media, financing the opposition or refusing the requested service can trigger an inspection, job loss or regulatory obstacle.
At the same time, political closeness can open access to public procurement and protection from competition. In such an environment, investing in relationships becomes more rational than investing in productivity, and economic power is transformed into political obedience. A bad business result in itself is not a proof of pressure. A trace of a specific state reward or threat, different treatment of similar firms and changes in behavior associated with political demand are needed.
The company can also change its behavior due to ordinary market or legal risk. For political dependence, a specific state threat or reward should be shown.
Works supporting this answer, with their evidence type and an explanation of how they relate to the claim.
comparing several countries or cases
Carothers, C. (2022), „Taking Authoritarian Anti-Corruption Reform Seriously“, Perspectives on Politics 20(1): 69–85.
- Contribution to this answer
- Carothers shows that the authoritarian government can use the fight against corruption selectively and centrally: since the political leadership determines how the rules will be applied, business actors can become dependent not only on the law but also on how the government will decide to use the law.
comparing several countries or cases
Carothers, C. (2023), „The Autocrat’s Corruption Dilemma“, Government and Opposition 58(1): 22–38.
Carothers, C. (2023), "The Autocrat's Corruption Dilemma", Government and Opposition 58(1): 22–38.
- Contribution to this answer
- “Corruption can bring business and political elites together through a common interest: privileges, contracts and access to rents give businesses the benefit of the existing system, but at the same time make them vulnerable because political change or loss of protection can threaten exactly what they have gained.
Explain how the system works
Gehlbach, S. i Sonin, K. (2014), „Government Control of the Media“, Journal of Public Economics 118: 163–171.
- Contribution to this answer
- Gehlbach and Sonin, on the example of the media, show a wider mechanism of dependence of the private owner: the state can influence the business decision when it controls the regulation or when the political goal of the government changes the value of private profits. The media can remain private property, and yet have a strong reason to adapt the content to the interest of the state.
Explain how the system works
Greene, K. F. (2007), Why Dominant Parties Lose, Cambridge University Press.
- Contribution to this answer
- Greene shows how the dominant party gains political strength when controlling the resources on which other actors in the economy depend. In such a system, business success is not necessarily just a market issue: proximity to the state can open access to resources that competitors do not have.
Historical data and comparison
Moustafa, T. (2007), The Struggle for Constitutional Power: Law, Politics, and Economic Development in Egypt, Cambridge University Press.
- Contribution to this answer
- Moustafa shows why the authoritarian government sometimes wants more reliable courts and rules: private investors need predictability to invest. But it is this case that shows the paradox the government wants enough rights for the economy to function, and not necessarily enough rights for private actors to be completely protected from political power.
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