regulatory responses within sector should therefore be greater in those sectors with more connected firms.<sup>33</sup> Against this background, we use two policy implementation indicators from the WBES as dependent variables in estimates of equation (1)). The first is firm responses to the question, _“What was the actual wait duration (from the day you applied to the day you received the service or approval)?”_ The second is the coefficient of variation, within the 4-digit sector, of responses to this variable.<sup>34</sup>

**Table 7: Political connections and variations in regulatory enforcement across firms**

||**W**<br>**Con**|**aiting day**<br>**struction**|**s for**<br>**Permit**|**CoV (C**|**onstructio**|**n Permit)**|
|---|---|---|---|---|---|---|
||**CEO**|**Owner**|**Broad**|**CEO**|**Owner**|**Broad**|
|**No. of PC firms**|-40.9**|-6.00**|-4.13**|.193**|.037**|.023|
||(-2.58)|(-2.77)|(-2.93)|(2.65)|(2.36)|(1.52)|
|ln(empl)|3.11|2.77|3.19|.001|.001|.001|
||(0.82)|(0.74)|(0.86)|(1.03)|(1.31)|(1.15)|
|Age|1.52**|1.56**|1.58**|-.013|-.014|-.014|
||(2.57)|(2.64)|(2.65)|(-0.97)|(-1.06)|(-1.03)|
|No. of firms / sectors|986|986|986|63|63|63|
|Sector dummies|Yes|Yes|Yes|Yes|Yes|Yes|
|R-squared|0.081|0.076|0.075|0.466|0.468|0.453|

Source: WBES data for Egypt 2004-2008 and sample of politically connected firms. Note: PC indicates the number of politically connected firms varying at the 4-digit sector level. The three different types of connections (ordered here by their restrictiveness) are defined in Table 1. The number of employees (size) and firm age vary at the firm level. All firm level regressions include 2-digit sector dummies. Standard errors are clustered at the sector level. *, ** indicates significance at the 10%, 5% level, t-statistics are reported in parentheses.

Table A3 in the Appendix summarizes the descriptive statistics among manufacturing sectors with at least one politically connected firm and all other sectors (with zero connected firms). It shows that firms in connected sectors wait, on average, 86 days less for their construction permit (broadest definition of connections). At the same time, the (coefficient of) variation is significantly larger in connected sectors pointing to the fact that some firms in connected sectors have access to fast-track 33 The coefficient of variation per 4-digit industry is the standard deviation divided by the mean; hence, this measure is independent of differences in the order of magnitudes in the mean (and standard deviation) across industries.

34 The WBES contains additional variables on government service delivery such as waiting time for an operating license, customs clearance, the number of inspections (by tax officials or municipalities), or the probability to get a government contract. The number of firms (and 4-digit industries) that report these services are, however, significantly smaller in our sample. For example, fewer firms export (and thus use customs services), or applied for government contracts or an operating license in the years of the survey. We find for all of these variables that the (coefficient of) variation of government services within 4-digit industries increases when politically connected firms operate in these industries. The corresponding coefficients are typically significant when we do not include 2-digit sector dummies. The significance levels typically drop when we additionally include 2-digit sector dummies, simply because, with fewer firms exposed to these regulations, the estimates are necessarily noisier. The results are available from the authors upon request.

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