Determinants of Corruption in Middle East Countries: Evidence from Panel Data

Corruption is as old as time, and it is really hard to find any country around the globe immune from corruption. According to World Bank (WB) and International Monetary Fund (IMF) corruption is defined as "the abuse of public or corporate office for private gain". Several decades ago, there were a number of studies conducted that provided significant determinants of corruption levels in many parts of the world. These variables that affect corruption can at times vary between regions. This study pinpoints some important factors that affect the corruption index in the Middle East countries. Based on data provided by Transparency International, the average number of corruption in the Middle East has recently become inflated. This study analyzes various economic and non-economic corruption determinants in the Middle East countries for the period between 2012 and 2018 using panel data to run two regression models. The results showed for economic variables that increasing in economic freedom, GDP per capita, and foreign direct investment significantly lead to decrease corruption phenomenon in the Middle East countries. whereas, the relationship between corruption and GDP growth, inflation, and openness trade index are statistically insignificant. Random effect panel data for non-economic variables model has been estimated. Unexpected relationship between democracy variable and CPI is stated, where higher democracy index leads to increasing in corruption in the Middle East countries. Education level and human development index have significantly effect on reducing corruption. Human development index should be increased by improve the level of the decent life among the societies. Even though the coefficient of female labor force is positive, it is statistically insignificant. Significant negative relationship between corruption and population as well as freedom index has been reported.