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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.

Suggested Citation

  • 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. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 2, number 9780226041162, June.
    2. 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.
    3. 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.
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    8. Hany Abdel-Latif & Hassan Aly, 2019. "Are politically connected firms turtles or gazelles? Evidence from the Egyptian uprising," Working Papers 1304, Economic Research Forum, revised 2019.
    9. Naeem A. Albihany & Abdullah M. Aljarodi, 2024. "The role of personal connections Wasta on early-stage entrepreneurial orientations: empirical evidence from Saudi Arabia," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-12, December.
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    12. Bénédicte Coestier, 2015. "Jordan and the Middle-Income Growth Trap: Arab Springs and Institutional Changes," EconomiX Working Papers 2015-8, University of Paris Nanterre, EconomiX.
    13. Nivine H. Abbas & Irna Van der Molen & Manal R. Nader & Jon C. Lovett, 2013. "Perceptions from the Public and Private Sector on Trust and Cooperation in the Field of Environmental Management in Lebanon," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 2, October.
    14. Shaikha Khalfan, 2024. "Wasta in business management: a critical review of recent developments and future trends in the tourism sector," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-10, December.
    15. Williams Colin C. & Yang Junhong, 2017. "Evaluating the Use of Personal Networks to Circumvent Formal Processes: A Case Study of Vruzki in Bulgaria," South East European Journal of Economics and Business, Sciendo, vol. 12(1), pages 57-67, April.
    16. Berger, Ron & Silbiger, Avi & Herstein, Ram & Barnes, Bradley R., 2015. "Analyzing business-to-business relationships in an Arab context," Journal of World Business, Elsevier, vol. 50(3), pages 454-464.
    17. C. Williams, Colin & Bezeredi, Slavko, 2017. "Evaluating The Use Of Personal Connections To Bypass Formal Procedures: A Study Of Vrski In Republic Of Macedonia," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 8(2), pages 169-182.
    18. 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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