This chapter, which is based on Diwan and Haidar (2017), looks into a country case where clientelism, rather than an attempt to exclude politically suspect firms from the marketplace, is likely to be the driving political force behind the tight relations connecting politicians and some firms....

Using firm-level data, we document that politically connected firms (PCFs) create more jobs than unconnected firms in Lebanon. We observe, however, that the presence of PCFs in a sector is correlated with lower job creation. Although causality is difficult to establish due to endogeneity issues,...