Corruption and Economic Growth Nexus: What has the Arab Spring Changed?

Öz

Corruption is an everlasting phenomenon in the Middle East and North Africa (MENA). It is considered one of the fundamental reasons for the Arab incidents that started in Tunisia in 2011. Considering its devastating effects, this paper concentrates on the impacts of corruption at the macro level following the Arab uprisings. Notably, it investigates the impact of corruption on economic growth between 1996-2020 in 18 MENA countries. The paper utilizes panel estimators with country-fixed effect regressions given the results of the Hausman test. Panel estimators help control time-variant unobserved heterogeneity and capture both time and country-specific differences. The results indicate that after the Arab Spring, corruption lowers economic growth. One unit increase in control of corruption score of World Governance Indicators (WGI) decreases economic growth between 1.64-2.98 percentage points depending on the model. The results are robust with alternative corruption indexes such as the International Country Risk Guide (ICRG), Varieties of Democracy (V-Dem), and the Corruption Perception Index (CPI). Furthermore, the Chow test confirms that 2011 constitutes a structural break in the history of the MENA region. The outcomes indicate that specific policies need to be implemented to alleviate the adverse impacts of corruption in MENA countries.

Anahtar Kelimeler

• Corruption
• Arab Spring
• Economic Growth
• Fixed Effects
• Chow Test

Yolsuzluk ve Ekonomik Büyüme İlişkisi: Arap Baharı Neleri Değiştirdi?

Öz

Yolsuzluk, Orta Doğu ve Kuzey Afrika'da (MENA) sonu gelmez bir olgudur. 2011 yılında Tunus'ta başlayan Arap olaylarının temel nedenlerinden biri olarak kabul edilmektedir. Yıkıcı etkileri göz önünde bulundurularak bu makale, Arap ayaklanmaları sonrasındaki yolsuzluğun makro düzeydeki etkilerine odaklanmaktadır. Özellikle, 18 MENA ülkesinde 1996-2020 yılları arasında yolsuzluğun ekonomik büyüme üzerindeki etkisini araştırıyor. Makalede, Hausman testinin sonuçları verilen ülke sabit etkili regresyonlara sahip panel tahmincileri kullanılmaktadır. Panel tahmin edicileri, zamana bağlı gözlemlenmemiş heterojenliği kontrol etmeye ve hem zamana hem de ülkeye özgü farklılıkları yakalamaya yardımcı olmaktadır. Sonuçlar, Arap Baharı sonrasında yolsuzluğun ekonomik büyümeyi düşürdüğünü göstermektedir. Dünya Yönetişim Göstergelerinin (WGI) yolsuzluğun kontrolü puanındaki bir birimlik artış, modele bağlı olarak ekonomik büyümeyi yüzde 1,64-2,98 puan arasında azaltmaktadır. Sonuçlar, Uluslararası Ülke Riski Rehberi (ICRG), Demokrasi Çeşitleri (V-Dem) ve Yolsuzluk Algılama Endeksi (CPI) gibi alternatif yolsuzluk endeksleri ile de sağlamdır. Buna ek olarak, Chow testi, 2011 yılının MENA bölgesinin tarihinde yapısal bir kırılma olduğunu doğrulamaktadır. Sonuçlar, MENA ülkelerinde yolsuzluğun olumsuz etkilerini hafifletmek için belirli politikaların uygulanması gerektiğini göstermektedir.

Anahtar Kelimeler

• Yolsuzluk
• Arap Baharı
• Ekonomik Büyüme
• Sabit Etkiler
• Chow Testi

Kaynakça

1. Abdel-Latif, H., Elgohari, H., & Mohamed, A. (2018). Corruption, political instability and growth: Evidence from the Arab Spring. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3240211
2. Ahmad, E., Ullah, M. A., & Arfeen, M. I. (2012). Does corruption affect economic growth? Latin American Journal of Economics, 49(2), 277–305. https://doi.org/10.7764/LAJE.49.2.277
3. Aidt, T., Dutta, J., & Sena, V. (2008). Governance regimes, corruption and growth: Theory and evidence. Journal of Comparative Economics, 36(2), 195–220. https://doi.org/10.1016/j.jce.2007.11.004
4. Amiri, H., Toussi, A., Karim, M. H., & Javanmard, R. (2017). Impact of economic transparency on economic growth in the Middle East countries. International Journal of Business and Development Studies, 9(2), 115–138.
5. Ansani, A., & Daniele, V. (2012). About a revolution: The economic motivations of the Arab Spring. International Journal of Development and Conflict, 02(03), 1250013. https://doi.org/10.1142/S2010269012500135
6. Arab Youth Survey. (2020). A Voice for change. http://arabyouthsurvey.com/wp-content/uploads/whitepaper/2020-AYS-whitepaper.pdf
7. Arezki, R., & Bruckner, M., (2011). Food prices and political instability. IMF Working Papers, 11(62), 1. https://doi.org/10.5089/9781455221066.001
8. Baklouti, N., & Boujelbene, Y. (2015). Exploring the relationship between democracy, corruption, and economic growth in MENA countries. Acta Universitatis Danubius. OEconomica, 11(3), 43–58.

9. Bardhan, P. (2005). Democracy and corruption: Comment. Liberal Democracy Nepal Bulletin, 3.
10. Barro, R. J. (1991). Economic growth in a cross section of countries. Quarterly Journal of Economics, 106, 407–443.
11. Basu, K., Bhattacharya, S., & Mishra, A. (1992). Notes on bribery and the control of corruption. Journal of Public Economics, 48(3), 349–359. https://doi.org/10.1016/0047-2727(92)90012-5
12. Basu, P. K. (2006). Corruption: A theoretical perspective and relevance for economic growth. International Review of Business Research Papers, 2(4), 59–68.
13. Bayley, D. H. (1966). The effects of corruption in a developing nation. The Western Political Quarterly, 19(4), 719–732.
14. Beck, P. J., & Maher, M. W. (1986). A comparison of bribery and bidding in thin markets. Economics Letters, 20(1), 1–5. https://doi.org/10.1016/0165-1765(86)90068-6
15. Billger, S. M., & Goel, R. K. (2009). Do existing corruption levels matter in controlling corruption? Journal of Development Economics, 90(2), 299–305. https://doi.org/10.1016/j.jdeveco.2008.07.006
16. Brown, S. F., & Shackman, J. (2007). Corruption and related socioeconomic factors: A time series study. Kyklos, 60(3), 319–347. https://doi.org/10.1111/j.1467-6435.2007.00374.x
17. Brunetti, A., & Weder, B. (1998). Investment and institutional uncertainty: A comparative study of different uncertainty measures. Weltwirtschaftliches Archiv, 134(3), 513–533. https://doi.org/10.1007/BF02707928
18. de Vaal, A., & Ebben, W. (2011). Institutions and the relation between corruption and economic growth: Institutions, corruption, and economic growth. Review of Development Economics, 15(1), 108–123. https://doi.org/10.1111/j.1467-9361.2010.00596.x
19. Djankov, S., Montalvo, J. G., & Reynal-Querol, M. (2008). The curse of aid. Journal of Economic Growth, 13(3), 169–194. https://doi.org/10.1007/s10887-008-9032-8
20. Feldman, N. (2020). The Arab winter: A tragedy. Princeton University Press.
21. Guetat, I. (2006). The effects of corruption on growth performance of the MENA countries. Journal of Economics and Finance, 30(2), 208–221. https://doi.org/10.1007/BF02761487
22. Heckelman, J. C., & Powell, B. (2010). Corruption and the institutional environment for growth. Comparative Economic Studies, 52(3), 351–378. https://doi.org/10.1057/ces.2010.14
23. Huntington, S. P. (1968). Political order in changing societies. Yale Univ. Press.
24. Johnston, M. (2005). Syndromes of corruption: Wealth, power, and democracy. Cambridge University Press.
25. Kaufmann, D., & Wei, S.-J. (2000). Does ‘grease money’ speed up the wheels of commerce? International Monetary Fund Policy Working Paper, WP/00/64.
26. Kubbe, I., & Varraich, A., (Eds.). (2020). Corruption and informal practices in the Middle East and North Africa (First Edition). Routledge.
27. Kurer, O. (1993). Clientelism, corruption, and the allocation of resources. Public Choice, 77(2), 259–273. https://doi.org/10.1007/BF01047869
28. Lagi, M., Bertrand, K. Z., & Bar-Yam, Y. (2011). The food crises and political instability in North Africa and the Middle East. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1910031
29. Leys, C. (1965). What is the problem about corruption? The Journal of Modern African Studies, 3(2), 215–230.
30. Lien, D.-H. D. (1986). A note on competitive bribery games. Economics Letters, 22(4), 337–341. https://doi.org/10.1016/0165-1765(86)90093-5
31. Looney, R. (2015). The political economy of the post-Arab Spring. Journal of South Asian and Middle Eastern Studies, 38(3), 1–29.
32. Lučić, D., Radišić, M., & Dobromirov, D. (2016). Causality between corruption and the level of GDP. Economic Research-Ekonomska Istraživanja, 29(1), 360–379. https://doi.org/10.1080/1331677X.2016.1169701
33. Lui, F. T. (1985). An Equilibrium queuing model of bribery. Journal of Political Economy, 93(4), 22.
34. Mankiw, N. G., Romer, D., & Weil, D. N. (1992). A contribution to the empirics of economic growth. Quarterly Journal of Economics, 107, 407–437.
35. Mauro, P. (1995). Corruption and growth. The Quarterly Journal of Economics, 110(3), 681–712. https://doi.org/10.2307/2946696
36. Mauro, P. (2004). The Persistence of corruption and slow economic growth. IMF Working Papers, 02(213), 1. https://doi.org/10.5089/9781451874952.001
37. Méndez, F., & Sepúlveda, F. (2006). Corruption, growth and political regimes: Cross country evidence. European Journal of Political Economy, 22(1), 82–98. https://doi.org/10.1016/j.ejpoleco.2005.04.005
38. Méon, P.-G., & Sekkat, K. (2005). Does corruption grease or sand the wheels of growth? Public Choice, 122(1–2), 69–97. https://doi.org/10.1007/s11127-005-3988-0
39. Mironov, M. (2005). Bad corruption, good corruption, and growth. 40.
40. Mnawar, A. (2015). Corruption and the “Arab spring.” Polish Journal of Political Science, 3, 36–49.
41. Mo, P. H. (2001). Corruption and economic growth. Journal of Comparative Economics, 29(1), 66–79. https://doi.org/10.1006/jcec.2000.1703
42. Mungiu-Pippidi, A. (2015). The quest for good governance: How societies develop control of corruption. Cambridge University Press.
43. Myrdal, G. (1968). Asian drama: An enquiry into the poverty of nations, vol 2. New York: The Twentieth Century Fund. Reprint in A.J. Heidenheimer, M. Johnston and V.T. LeVine (Eds.), Political Corruption: A Handbook, 1989. Oxford: Transaction Books., 953–961.
44. Podobnik, B., Shao, J., Njavro, D., Ivanov, P. Ch., & Stanley, H. E. (2008). Influence of corruption on economic growth rate and foreign investment. The European Physical Journal B, 63(4), 547–550. https://doi.org/10.1140/epjb/e2008-00210-2
45. Reinsberg, B., Stubbs, T., Kentikelenis, A., & King, L. (2020). Bad governance: How privatization increases corruption in the developing world. Regulation & Governance, 14(4), 698–717. https://doi.org/10.1111/rego.12265
46. Ross, M. L. (2001). Does oil hinder democracy? World Politics, 53(3), 325–361. https://doi.org/10.1353/wp.2001.0011
47. Rothstein, B., & Varraich, A. (2017). Making sense of corruption. Cambridge University Press.
48. Sbaouelgi, J. (2019). The impact of corruption on economic growth in MENA Region. 14(2), 15.
49. Shleifer, A., & Vishny, R. W. (1993). Corruption. The Quarterly Journal of Economics, 108(3), 599–617.
50. Swaleheen, M. (2011). Economic growth with endogenous corruption: An empirical study. Public Choice, 146(1–2), 23–41. https://doi.org/10.1007/s11127-009-9581-1
51. Treisman, D. (2000). The causes of corruption: A cross-national study. Journal of Public Economics, 76(3), 399–457. https://doi.org/10.1016/S0047-2727(99)00092-4
52. Warf, B. (2015). Corruption in the Middle East and North Africa: A geographic perspective. The Arab World Geographer, 18(1–2), 18.