Shari'a under Challenge: The Political History of Islamic Legal Institutions in Israel

Abstract

This article, based on research conducted in Jordan, discusses how affects the climate. Jordan's is mediocre in international and regional comparison, making it insufficient in light of the country's small domestic market. Businesspeople consider the complexity of administrative procedures to be a main problem for investors, along with a lack of fairness and predictability in administrative decisions. Favoritism, which is referred to as (connections) contributes substantially to both problems. Investors with good wasta can speed up procedures and get exclusive access to services and information. They can even influence legislation to their advantage. Perhaps even more problematic, entrepreneurs tend to invest their time and money in social relations rather than in productive capital, because their success depends on their wasta rather than the quality of their products. Many Jordanians are aware of these problems. Nevertheless they keep using wasta for at least four reasons. First, they do not see any alternative for achieving their goals. Second, people go on using their wasta as long as everybody else does the same. Third, many Jordanians associate the use of wasta with cherished values, such as solidarity or loyalty, i.e. they believe that the use of wasta is part of their culture. Fourth, Jordan's administrative and political system lacks transparency and accountability on all levels. A good is central to economic growth and poverty alleviation; it is the key determinant of the decision of private firms to invest, innovate, and create jobs. Good governance on its part is a main aspect of an enabling environment, and the control of corruption is one of its core dimensions. 1 Favoritism is a form of corruption. It is the use of personal connections to receive preferential treatment, which constitutes a widespread phenomenon in many parts of the world. In Asia, it has found growing attention in recent years, while relatively little research has been done on in the Middle East and North Africa region, and particularly on the impacts of wasta on the climate. 2 In this region, is usually referred to as wasta, which is the Arabic word for relation or connection. The aim of this article is thus to discuss how affects private sector development and what policy recommendations can be derived from the answer to this question. It is based on empirical evidence from Jordan where a team from the German Development Institute/Deutsches Institut fur Entwicklungspolitik (DIE) 3 conducted empirical research in early 2006. The article concludes that has significant impacts on investment in Jordan and therefore has to be addressed. Political and administrative reforms are crucial for achieving this goal. The article has seven sections. In the following section, we define the terms business climate and favoritism and present a conceptual framework for the effects of favoritism. From this we derive our assumption that leads to unfairness and inefficiency in state-business relations and thereby affects the climate. In Section? 3, we describe our methodological approach, i.e. how our hypothesis has been tested in Jordan. Sections? 4 and 5 present the findings of this empirical research with respect to the quality of the and the use of wasta in Jordan. Section? 6 discusses how wasta influences state-business relations and, thereby, the at large. Section? 7 concludes with policy recommendations, which are based on an analysis of the main reasons for the persistence of the use of wasta in Jordan. THE BUSINESS CLIMATE AND THE IMPACT OF FAVORITISM The can be generally defined as the set of factors that shape the decisions of both local and foreign firms to do in a country. While some factors, such as a country's endowment with natural resources or its geopolitical situation, cannot be changed by politics, others can. …