A comparative examination of the impact of business -government relations on labor market reform in Egypt and Mexico, 1975--199

Why have benefits to labor in Egypt remained constant after neoliberal economic reform began, whereas benefits to labor in Mexico have clearly decreased? Interestingly, the political economy of Egypt and Mexico displayed striking similarities pre-reform. Yet, despite the similarities in the state-labor relations and the labor markets of both countries pre-reform, Egypt and Mexico have pursued distinct paths of labor market reform. The purpose of this study was to examine how and why the labor market policy choices of two countries possessing similar political economies pre-reform, have radically diverged after the initiation of economic liberalization. The central argument is that in the context of economic liberalization, the business-government relationship is an important determinant of labor market reform.;Using both quantitative and qualitative methods, this dissertation examines the role that business-government relations play in influencing labor market reform. An original quantitative measure of business strength is developed and applied in the regression analysis that is conducted. The results of this analysis show strong evidence that business strength is, in fact, a fundamental force shaping the labor market policy choices of Egypt and Mexico. More specifically, the quantitative analysis demonstrates business strength is positively related to neoliberal labor market reform.;These findings are confirmed in the detailed case studies of Egypt and Mexico. The case studies further specify the conditions needed for business to influence labor market reform in its favor. More specifically, they revealed that in order for business to influence labor market reform in its favor, business must possess both structural and institutional power. Finally, the case studies demonstrate that when labor market reform involves a shift away from a traditional coalition partner, governments will be reluctant to promote it until an alternative coalition is established to provide the political support necessary to make the policy change. This dissertation provides comparative lessons for the many liberalizing governments in developing countries that face similar choices and have, to varying degrees similar domestic political constraints that they must negotiate.