Political connections and business sentiment in the MENA region

This study examines the relationship between firms’ political connections and their confidence in achieving enhanced future sales. Using firm-level survey data from selected Middle Eastern and North African (MENA) countries, we apply ordered probit regressions to show that businesses with board members who have political experience exhibit greater confidence in anticipating improved sales. This positive association remains robust after controlling for key determinants of owners’ and managers’ sentiment. Structural equation modeling and mediation analysis further identify membership in business associations as a key mediating factor, mainly through improved access to markets, credit, and lobbying channels. Moreover, the findings highlight the importance of a firm’s size and possession of a well-defined business strategy as additional mediators in the link between political connections and business sentiment.