The Effect of Openness on Corruption in the Selected MENA Countries

Corruption is one of the most important determinant factors in economic fields, specifically in trade; and nowadays, it is crucial to know what factors reinforce or mitigate it. Trade openness is an influencing factor on corruption, and the extant literature has two different general perspectives facing that. The first perspective emphasizes that openness has a negative impact on corruption, while the second idea believes that such impact is positive. Hence, the aim of this paper is to answer this question: “what is the effect of openness on corruption in selected MENA countries?” To this end, our analysis is based on panel data that covered 10 MENA countries for 2003–2014. The results indicate that, along with the negative effect of per capita income and institutional quality such as ruling law, political stability and regulation quality, the effect of openness is also negative and significant. In other words, increase and expansion of trade and creating a competitive environment, as well as interacting with countries with systemic structure and less corruption, contributes to improving the institutional and legal environment in the MENA countries, so that, consequently, corruption would decrease. Accordingly, since the rank of Iran in openness and corruption is tenth and second among ten countries respectively, it is recommended that reducing trade barriers such as import tariff and creating a free market, would result in the fall of corruption through reducing monopoly rents of authorities in the field of trade, especially in imports.