Document Type : Research Paper
Authors
1 M.A, Department of Economics, Bu Ali Sina University, Hamedan, Iran
2 Professor, Department of Economics, Bu Ali Sina University, Hamedan, Iran
Abstract
Extended Abstract
Introduction
In the economic development of countries, important features of good governance and using corruption control are the key factors to gain more public satisfaction and reduce the budget deficit are among the important program goals of governments. The necessity of the budget was formed in parallel with the importance of the role of governments in economic activities, and over time, the structure changed and evolved. In general, governments enter the market when the market alone cannot create efficiency in the economy and the prices do not reflect the real social costs and benefits. Corruption is one of the factors hindering growth and deviation in the economy Of course, the inability of the market mechanism alone does not justify the government's intervention in financial issues, in other words, although market failure is only a necessary condition for government intervention in the economy, it is not a sufficient condition. The condition is necessary because, according to the theory of the classics, if the market mechanism worked satisfactorily through the operation of invisible hands, there would be no need for government intervention. Generally, the government intervenes in the economy to prevent market failures, and protect people's rights, and international trade. According to the mentioned cases, the necessity of the government's intervention in some matters was proved; The important point is that with the expansion of these interventions and the increase of the activities of the public sector, the volume of their expenses has also expanded significantly over time. This issue has made the importance of paying attention to the budget and funding solutions even more important efficiency, which usually leads to increasing government budget deficits. In this regard, experience has shown that strengthening the foundations of good governance as an opportunity to increase growth, and security and improve the business environment can play a significant role in achieving the goals of sustainable development and adjusting the deficit figures. In the meantime, the effect of financial corruption directly and the effect of indicators determining good governance indirectly on the budget deficit are of serious concern. Improving the quality of governance, and especially controlling government corruption, can lead to managing public spending, gaining public confidence, increasing tax revenues, reducing tax evasion, and ultimately reducing the budget deficit. Therefore, the need to control corruption and increase the quality of governance becomes important. Corruption is like a force that damages the proper functioning of markets. In addition, the quality of governance is also another important institutional factor that affects the process of growth and development and improving the performance of the tax system and as a result reducing the budget deficit.
Materials and Methods
The purpose of this study is to investigate the deterrent effect of good governance on the budget deficit through corruption control in developing economies of the Middle East and North Africa (MENA), during the years 2002-2018; using the generalized method of moments (GMM).
Results and Discussion
Many macro variables affect the budget deficit, and the focus of the present research was on two variables of good governance and corruption control, because today, financial corruption and its fight is considered as a fundamental issue in many different countries of the world.
There are different types of corruption, one of which is financial corruption. Financial corruption is a complex phenomenon that has various effects. So that the scope of financial corruption is wide and it ranges from an individual act of paying a bribe to a comprehensive malpractice that includes all elements of the political and economic system. Corruption is sometimes considered as a structural problem of politics or economy, and it may also be considered as a cultural and moral issue; But in this research, only one of the consequences of corruption, i.e. the effect of financial corruption control on the budget deficit, was investigated. In general, it can be said that good governance is the practice of economic, political, and executive management of a country's resources to achieve the set goals.
In line with the results of the studies of many thinkers, the results of this study also show the fact that the existence of corruption and lack of good governance can aggravate the problems of the underdevelopment of the countries under study, especially the problem of government budget deficits in be the economy of the country; Because in different economic systems, an important part of the government's duties are implemented through the budget.
Conclusion
The results of the estimation of the research model showed that the main variables introduced have a significant effect on the budget deficit of governments; so the variable of corruption control has a negative and significant effect on the budget deficit, and the hypothesis related to the significance of the effect of the variable of corruption control on reducing the budget deficit cannot be rejected. The good governance index has a positive and significant effect on the budget deficit in the group of countries under study; Therefore, the hypothesis based on a meaningful relationship between good governance and budget deficit cannot be rejected either. The negative relationship between corruption control and tax revenue is confirmed; With the justification that the variable of good governance and corruption control affects both government revenues and government expenses Considering the extent and severity of the influence of these variables on government revenues and expenses in the MENA countries, the positive or negative relationship between good governance variables and corruption control on the budget deficit can be extracted. The general level of prices and the inflation index also showed that it can have a positive and significant effect on the government budget deficit in the MENA group of countries
So creeping and mild inflations have a positive effect on investment and severe inflation also. It severely reduces and sometimes stops productive investment, Finally, based on the findings of the current research and the results of the estimation of the measurement model, the negative effect of corruption control and the positive effect of good governance on the budget deficit were confirmed.
Keywords
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