When do autocracies start to liberalize foreign trade? Evidence from four cases in the Middle East and North Africa

This paper argues that within autocracies the beginning of IMF-friendly trade and capital account reforms is highly contingent on the ability of alternative policy regulations to provide respective regimes with domestically needed amounts of convertible foreign exchange. A longitudinal comparison of four countries (Morocco, Tunisia, Egypt and Jordan) between the 1960s and the early 1990s in the Middle East and North Africa region shows a historical sequencing of reforms. Before the implementation of orthodox policy change, foreign exchange scarcity was managed primarily by rising restrictions, accumulation of debt and a number of unilateral country-specific strategies, including broader economic openings (infitah) and selective capital account liberalizations. However, IMF-friendly reforms only became a political option after the failure of these alternative policies and the simultaneous drying up of unconditional finance. These findings complement recent debates about the rush to free trade in at least two aspects. First, they point to distinct causal mechanisms depending on the type of political regime (e.g., autocracy versus democracy), explaining the beginning of trade and capital account liberalizations among developing nations. They specify, second, one important contextual condition in regard to the effectiveness of IMF surveillance power.