The effect of corruption control and economic policies on economic growth in the Middle East and North Africa (MENA)

Document Type : Original Article

Authors

1 Assistant Professor of Economics Damghan University, Damghan-Iran

2 MSc of Economics & Social Statistics (Lecturue of Economics Damghan University, Damghan-Iran)

3 MA of Economics, Urmia University

Abstract

Corruption is an abnormal economic, political and cultural phenomenon that more or less exists within all countries and is a major obstacle to the growth and development. So, the main aim in this reseach is to investigate the role of corruption control in the impact of monetary and fiscal policies on economic growth. Doing so a sample including Iran and 19 member countries of the Middle East and North Africa during the period 2002-2019 and Panel Method of Generalized Moment (PGMM) and Panel Vector Auto Regression (PVAR) are used. The results of PGMM model estimation show a positive and significant relationship between corruption control variables as well as the cross effect of corruption control and liquidity and cross effect of corruption control and final government spending on economic growth. While, without corruption control, liquidity variables and final government spending have had a negative impact on economic growth. In PVAR estimation, the effect of variables on economic growth has been investigated using the impulse response function and variance decomposition. Comparing the results of estimating PGMM and PVAR methods show that in both methods the control of corruption and liquidity intersection, control of corruption and final government expenditure intersection, and the index of corruption control on economic growth are positive while the effect of final consumption of government and liquidity without control of corruption is negative. Also, the effect of gross fixed capital formation as a control variable of the model has been positive and significant.

Keywords