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Title: The Power of the Street: Evidence from Egypt's Arab Spring

Author(s): Daron Acemoglu, Tarek Alexander Hassan and Ahmed Tahoun

Publication Date: November 2014

Keyword(s): corruption, de facto political power, institutions, mobilization, protests, rents and value of connections

Programme Area(s): Development Economics, Financial Economics and International Macroeconomics

Abstract: During Egypt's Arab Spring, unprecedented popular mobilization and protests brought down Hosni Mubarak's government and ushered in an era of competition between three groups: elites associated with Mubarak's National Democratic Party (NDP), the military, and the Islamist Muslim Brotherhood. Street protests continued to play an important role during this power struggle. We show that these protests are associated with differential stock market returns for firms connected to the three groups. Using daily variation in the number of protesters, we document that more intense protests in Tahrir Square are associated with lower stock market valuations for firms connected to the group currently in power relative to non-connected firms, but have no impact on the relative valuations of firms connected to other powerful groups. We further show that activity on social media may have played an important role in mobilizing protesters, but had no direct effect on relative valuations. According to our preferred interpretation, these events provide evidence that, under weak institutions, popular mobilization and protests have a role in restricting the ability of connected firms to capture excess rents.

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Bibliographic Reference

Acemoglu, D, Hassan, T and Tahoun, A. 2014. 'The Power of the Street: Evidence from Egypt's Arab Spring'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=10262