The Politics of Weak Control: State Capacity and Economic Semi-Formality in the Middle East

Abstract

This article examines the limitations of the Middle Eastern state from a somewhat different angle, namely the nature of its relationship with a type of economic actor that may best be described as "semi-formal." These are primarily comprised of members of the petite bourgeoisie and owners of small and medium-sized enterprises (SMEs). The article begins with an examination of the phenomenon of economic semi-formality within the larger context of the political economy of non-oil rich Middle Eastern states. It argues that these states face diminished capacities in their efforts to regulate the economic activities of the petite bourgeoisie and some SMEs. At best, the state can only partially enforce its regulative agendas on the activities of these economic actors, resulting in the emergence of the economic phenomenon of "semi-formality": those economic activities that are only partially or episodically regulated by the state. Semi-formality, the article argues, is not simply the result of entrepreneurs' natural impulse to evade state regulations. It is, more fundamentally, a function of the state's own limited capacities to fulfill the regulative tasks it sets for itself. The state's uneven enforcement of regulative policies—uneven over time or in relation to different economic actors—allows nonstate economic actors, whether overwhelmingly in the formal sector or in the informal sector of the economy, to slip in and out of semi-formality.