Regulation, Trust, and Cronyism in Middle Eastern Societies: The Simple Economics of 'Wasta'

Andy Barnett (), Bruce Yandle () and George Naufal
Additional contact information
Andy Barnett: Auburn University
Bruce Yandle: Clemson University

No 7201, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Despite being a fixture of everyday life in the Arab world, wasta, which may be thought of as special influence by members of the same group or tribe, has received little attention from social scientists. Our casual empiricism suggests that wasta is an important determinant of how economic activities are organized and resources are allocated in Middle Eastern societies, yet economists, even those who specialize in work related to the Middle East, have not addressed the issue of wasta. With this paper we provide a modest beginning to filling that void. Specifically, we use the history of wasta, Hayek's concept of extended order and Coase's work on the nature of the firm to draw inferences regarding the existence of wasta and its persistence in Arab societies.

Keywords: Middle East; Coase; Hayek; firm; wasta; cronyism; social capital (search for similar items in EconPapers)
JEL-codes: D21 K20 N45 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2013-02
New Economics Papers: this item is included in nep-ara, nep-cdm, nep-evo, nep-hpe and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Published - published in: Journal of Socio-Economics, 2013, 44, 41-46

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Journal Article: Regulation, trust, and cronyism in Middle Eastern societies: The simple economics of “wasta” (2013)
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