Utilizing an original data set, this paper demonstrates how protectionist industrial policy during the period of hybrid liberalization has shaped the organizational structure of clothing firms in Egypt. It investigates determinants of vertical integration of clothing firms into fabric production. High-end market segments are a critical determinant of integration. Limited access to finance restricts the possibilities for many firms to undertake the investment required to integrate, whilst volatile and uncertain market conditions make firms more likely to rely on the market for their inputs. But there are nuances related to market segment. Producers of higher quality garments rely on imported textiles, so these producers do not integrate even if search and switch costs are high. But the opposite is true of producers relying on domestic suppliers. Foreign institutions are better able to ensure contract enforcement with respect to quality and timely delivery so that suppliers’ opportunistic behaviour is deterred, reducing the necessity of clothing firms to integrate. This may not be the case with respect to domestic suppliers when domestic institutions do not guarantee the same level of enforcement. The adoption of the hybrid liberalization model meant that the transition to a market economy was not preceded by the creation of the necessary regulatory framework. This model resulted in inefficient upstream production and in an institutional setting conducive to agency problems. It also meant that business suffers excessive and inefficient bureaucracy. It is thus not possible for firms to achieve the first best outcome of arm’s length relations based on frictionless market transactions. Given these structural constraints firms opt for the second best solution of make rather than buy, i.e. vertical integration. But only some firms are able to use the arbitrary and discretionary decision making system to their favour, negotiating government obstacles to successful business. Those linked to power, prospered, whilst the businesses of others foundered against the wall of patronage, bureaucracy and red tape.

本文利用原始数据集展示了混合自由化时期的保护主义产业政策如何塑造埃及服装公司的组织结构。它调查了服装公司垂直整合到织物生产中的决定因素。高端细分市场是整合的关键决定因素。有限的融资渠道限制了许多公司进行整合所需投资的可能性，而动荡和不确定的市场条件使公司更有可能依赖市场获取投入。但在细分市场方面存在细微差别。高质量服装的生产商依赖进口纺织品，因此即使搜索和转换成本很高，这些生产商也不会整合。但对于依赖国内供应商的生产商而言，情况恰恰相反。外国机构能够更好地确保质量和及时交货方面的合同执行，从而阻止供应商的机会主义行为，从而降低服装企业整合的必要性。当国内机构不能保证相同水平的执法时，国内供应商的情况可能并非如此。混合自由化模式的采用意味着在向市场经济过渡之前并没有建立必要的监管框架。这种模式导致上游生产效率低下，并导致制度环境助长代理问题。这也意味着企业遭受过度和低效的官僚主义。因此，公司不可能在无摩擦市场交易的基础上实现公平关系的最佳结果。鉴于这些结构性限制，公司选择了制造而非购买的次优解决方案，即垂直整合。但只有一些公司能够利用武断和自由裁量权的决策系统来对自己有利，谈判政府对成功企业的障碍。那些与权力相关的企业繁荣昌盛，而其他企业则在庇护、官僚主义和繁文缛节的影响下倒闭。