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Regulation, trust, and cronyism in Middle Eastern societies: The simple economics of “wasta”

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  • Barnett, Andy
  • Yandle, Bruce
  • Naufal, George

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.

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  • Barnett, Andy & Yandle, Bruce & Naufal, George, 2013. "Regulation, trust, and cronyism in Middle Eastern societies: The simple economics of “wasta”," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 44(C), pages 41-46.
    • Handle: RePEc:eee:soceco:v:44:y:2013:i:c:p:41-46
    DOI: 10.1016/j.socec.2013.02.004
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    1. Ahmed Amin Mohamed & Hadia Hamdy, 2008. "The Stigma of Wasta: The Effect of Wasta on Perceived Competence and Morality," Working Papers 5, The German University in Cairo, Faculty of Management Technology.
    2. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 2, number 9780226041162.
    3. Lipford, Jody W. & Yandle, Bruce, 2009. "The determinants of purposeful voluntarism," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(1), pages 72-79, January.
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    16. Moustafa, Khaled, 2018. "Promoting an academic culture in the Arab world," arabixiv.org bcp5f, Center for Open Science.
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    More about this item

    Keywords

    Cronyism; Wasta; Firm; Hayek; Coase; Middle East;
    All these keywords.

    JEL classification:

    • B15 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Historical; Institutional; Evolutionary
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • N45 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Asia including Middle East

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