Business–Government Relations and Industrial Change: The Politics of Upgrading in Morocco and Tunisia

SummaryProcesses of upgrading and the promotion of industrial “clusters,” which encompass multiple policies, institutions, and actors, necessarily vary from place to place. Based on the evidence from Morocco and Tunisia, this article contends that different patterns of business–government relations facilitate different elements of industrial upgrading and cluster promotion. State-dominated political economies may be more amenable to implementing macroeconomic and infrastructure-related measures, which are critical in the initial stages of upgrading. Political economies with more organized business communities may be better equipped to pursue the kinds of inter-firm linkages traditionally associated with later phases of upgrading, when the focus is on boosting innovation.