How Revolutions Shape (or Rather Blur) Markets: Initial Insights from the Arab Spring

Abstract

How do revolutions shape markets? Prior social movement research has focused on those movements that seek to work with the existing state to change markets. Yet, revolutions are a unique outcome of social movement activity that seeks to create change through removing, rather than working with, the existing state. Using a novel sampling methodology to construct a unique dataset of both Tunisian and Egyptian entrepreneurs during the Arab Spring, we find that because revolutions seek to disrupt the state, they delegitimize formal firms (i.e. those registered with the state) and legitimize informal firms (i.e. those unregistered with the state). In so doing, revolutions improve the ability of informal firms to access formal resources from state banks. Moreover, any firms that have a structure similar to that of informal firms (i.e. sole proprietorships) also have an easier time accessing these formal state resources after the revolution, irrespective of their registration status. This study contributes to the social movements literature, particularly as it relates to markets and the state.