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

  • Barnett, Andy

    ()

    (Auburn University)

  • Yandle, Bruce

    ()

    (Clemson University)

  • Naufal, George S

    ()

    (Texas A&M University)

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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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7201.

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Length: 22 pages
Date of creation: Feb 2013
Date of revision:
Publication status: published in: Journal of Socio-Economics, 2013, 44, 41-46
Handle: RePEc:iza:izadps:dp7201
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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, May.
  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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