Decentralization, Transparency of Public Procurement, and Corruption in MENA Countries

Najah Souissi-Kachouri () and Meriem Guizani-Jelassi ()
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Najah Souissi-Kachouri: University of Tunis El Manar
Meriem Guizani-Jelassi: University of Tunis El Manar

No 1621, Working Papers from Economic Research Forum

Abstract: This paper aims to study the effect of decentralization on corruption in the MENA region during the period 2001-19. We adopt the model of Fisman and Gatti (2002) and use two econometric methods: the instrumental variable method and the system Generalized Method of Moments (system GMM method). Firstly, we show that decentralization in these economies favors rent-seeking behavior and cannot be a mechanism to fight corruption. This result is robust for these two estimation methods and different corruption and decentralization indicators. Secondly, we introduce an interactive variable to the baseline model, which links the indicator of decentralization to that of transparency in public procurement. Likewise, we estimate this model by using the instrumental variable method and the system GMM method. We show that a threshold level of transparency in public procurement is necessary for successful decentralization and the reduction of corruption in MENA countries. This result is robust for the two estimation methods and different corruption and decentralization indicators.

Pages: 32
Date: 2022-12-20, Revised 2022-12-20
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Published by The Economic Research Forum (ERF)

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