Informal Welfare: Charitable Giving, Social Networks, and Democratic Accountability in the Middle East

This book examines the economic and political consequences of the voluntary philanthropic provisioning of public services and social insurance in the Middle East. An overwhelming share of the existing political economy research on distributive politics and its welfare consequences focuses on the formal, institutional, and politically motivated government provision of public infrastructure, services, and social insurance during challenging times. Although the formal provision by the government has replaced philanthropic, voluntary, and informal welfare by local economic elites in many advanced industrialized countries, most places in the global south, especially in the Middle East, still rely on charitable and voluntary distribution by economic elites. What are the incentives of the rich to philanthropically invest in local public services and informal social insurance payments? How do these incentives shape inequalities in access to these distributive goods across ethnic, social, and geographic groups? How does the notion that the "rich members of the local social network should provide for their community more than the government" shape political behavior and democratic outcomes in countries with sizeable informal welfare activity? This book examines these questions in the context of Turkey and the Middle East. I show that social proximity between the provider and the receiver significantly affects the distribution of charitable investments. The clustering of benefits to immediate networks reproduces or even exacerbates inequalities in access to essential services and charitable social insurance. I argue, in return, that the voluntary and philanthropic provisioning of welfare negatively impacts democratic accountability, leading to a mismatch between the economic performance, the targeting of distributive benefits, and the electoral performance of incumbents in settings where informal welfare provision culturally and traditionally replaces formal distribution.

Homogenizing the High Street: wealthy minorities and the Economic Foundations of Nation-Building

Most scholarly work on the political economy of ethno-religious diversity implicitly assumes the economic dominance of majority groups over minorities in these countries. This assumption is unsurprising, given that minorities often have lower socio-economic status than members of the dominant ethno-religious group due to accumulated economic, political, and social discrimination over decades or even centuries. For example, consistent and institutionalized underinvestment in public services crucial for economic development and social mobility—such as schools, transportation, and communication networks—leads to low educational attainment and limited economic opportunities. This situation adversely affects the socio-economic outcomes of ethno-religious minorities. Similarly, persistent discrimination in labor and housing markets means that minorities face challenges in catching up with the dominant group, even if they have access to beneficial resources through resettlement in majority areas or by living within dense social networks that counteract governmental failures to supply public resources.

However, historical evidence shows numerous examples of successful ethnic or religious minority groups that were more educated and wealthier than the core groups. Indeed, ethno-religious heterogeneity in markets is one outcome of modernization. In traditional and developing colonial or imperial societies, capital and labor were often organized along ethno-religious lines. Notable examples include Indians in Uganda and Kenya, Jews in Europe and the Middle East, Armenians and Greeks in the Middle East, and Chinese in Malaysia, the Philippines, and Indonesia. In post-colonial and post-imperial contexts, these minorities can challenge the legitimacy of core-group political elites, particularly if they are perceived by the majority as political "fifth columns" for security-related reasons or as economic "fifth columns" due to a perception that these groups obstruct the economic development of the "sons of the soil" and impede economic liberation from former colonial/imperial powers.

Newly emergent political elites have various methods for addressing inequalities between ethno-religious factions. Some policies are more repressive than others. Some governments may engage in progressive redistributive policies to enhance social mobility for economically disadvantaged majority groups. Conversely, elites might forcibly "correct" these inequalities by restricting non-core groups from entering lucrative economic sectors, confiscating their properties, or imposing disproportionate identity-based taxes to diminish their economic power. History is full of examples of political elites aiming to create an ethnically homogeneous state through policies designed to eliminate minorities from the economy.

This book explores the economic repression of affluent minorities as a strategic tool in nation-building. The manuscript is structured in two distinct sections. The first section offers a comparative analysis to identify the conditions under which states economically marginalize wealthy minority groups. The second section provides an in-depth examination of the post-Ottoman world, using its rich historical context to illuminate the economic challenges and political violence faced by its wealthy ethno-religious minorities.