The Role of Corruption in Income Inequality in a Rentier Economy: The Case of Iraq

Abstract

The Iraqi economy suffers from a grim rentier reliance on the oil sector, exacerbated by decision-makers' reluctance to diversify the economy to alleviate this dependency. This situation has led to high levels of administrative and financial corruption, creating a significant barrier to private sector involvement in economic activities. The research problem lies in the increased administrative and financial corruption in the public sector, resulting in its bloated inefficiency and low productivity. This contrasts with the rising incomes of those who benefit from poor economic conditions and weak law enforcement, at the expense of the majority of the population who suffer from varying degrees of poverty.The research aims to analyze the relationship between corruption and income inequality in Iraq, based on the hypothesis that "a higher degree of corruption drives a deeper income distribution gap among the population." The research found a strong relationship between the level of corruption in the public sector and income inequality in the Iraqi economy. The study recommends the importance of supporting small projects to provide adequate income sources for most population segments, ensuring them a decent and dignified standard of living.