Six papers make up this issue. The first one, titled Can Corruption be Prevented by Increasing Tax Auditing in Turkey? by Burcu Gediz Oral and Ferhan Sayın, aims to determine the relationship between corruption and tax auditing during the period of 1985-2011 in Turkey. The study determines the relationship between the variables using the Vector Autoregressive (VAR) Analysis. The results from VAR Granger Causality Test indicate that audit rate variable has an impact on the corruption index and also corruption index variable on the share of the tax revenues in the general budget revenues. The Variance Decomposition Analysis results used in order to determine the most effective of the variable on those in the model show that corruption variable acts as an exogenous variable in the short-term. In other words, corruption is not affected by other variables in the short term. Changes in index of corruption are largely due to the corruption itself and audit rate in the long term. However, results of Impulse-Response Analysis to show whether the effective variable could be used as an effective policy instrument indicate that variable likely to be in audit rate could be positively effective for the mid-term while it could decrease in the long run. In other words, the tax audit reduces corruption in the long term.

The second paper, titled Patterns of Current Account Imbalances: A Case Study on Iran and Turkey by Zahra Fotourehchi, Ahmet Şahinöz and Davoud Panahi, explores the current account patterns of Iran and Turkey, by applying the Seemingly Unrelated Regression [SUR] Method, during the period 1980-2012. This paper found that except net lending/borrowing of budget, exogenous factors that effect on both Iran and Turkey current account were not common. In Iran, the current account tends to decrease by any increase in the domestic credit/GDP, PPP per capita and net lending/borrowing of budget and tend to increase by any increase in foreign currency reserves, net oil export and net foreign asset, but Turkey's current account tend to decrease by any increase in GDP growth and net lending/borrowing of budget (twin deficit). Trade-induced interdependence significantly decreases the likelihood of conflict in the region.

The third paper, titled The Link between Financial Development and Knowledge-based Economy - Evidence from Emerging Markets by Soo-Wah Low, Lain-Tze Tee, Si-Roei Kew and Noor A. Ghazali, examines the role of financial development in shaping knowledge-based economy in emerging countries using panel data approach from 1995 to 2011. On overall financial development, they find that larger financial sector and financial system that is more bank-based are associated with higher knowledge economy status. On banking development, the results show that a well-developed banking sector contributes positively to a country’s standing in the knowledge economy index. Interestingly, they found no evidence that stock market influences the state of knowledge economy. The findings suggest that bank-based financial system is the key financial structure that best supports knowledge-based development in emerging countries.

The fourth paper, titled Trade and Energy Consumption in the OPEC Countries by Reza Najarzadeh, Michael Reed, Azam Khoshkhoo and A. Gallavani, investigates the large increases of many economies in their international trade volume, national income and energy consumption over the past 50 years. In 2010, the world GDP growth rate was 3.6%. In the same year, the rate of international trade growth in developed countries was 12.9% and in the developing countries and common-interest countries combined together growth was 16.7%. Total energy consumption in the world increased from 8,132 million tons in 1990 to 11,099 million tons in 2007. All these bring up an interesting question: how increases in international trade influence energy consumption in different countries. This study uses panel data estimation techniques to examine the impact of international trade on energy consumption in a sample of ten OPEC countries during 1985 to 2009. We also examine the impact of GDP and energy prices on energy consumption. The results show a statistically significant relationship between energy consumption and trade. Therefore, an increase in trade affects energy demand in these countries. This could have implications for energy as well as environmental policies.

The fifth paper, titled Foreign Direct Investment, Human Capital and Economic Growth in Malaysia by Samer Abou Shakar and Mohamed Aslam, studies the international markets that have been the major influence spurring economic growth and development in the Malaysian economy even until today. There were two sources of growth, namely foreign capital and exports of commodities. The government particularly beginning in 1971 moved to develop human capital stock by investing a large amount of public capital in the education sector. However, the growth of human capital did not become a significant catalyst for economic growth. Public and private expenditures for research and development (R&D) remained low compared to neighboring countries such as South Korea and Singapore. This paper examines the effects of Foreign Direct Investment (FDI) and Human Capital (HC) development on economic growth in Malaysia. This paper will also discuss the contribution of these two factors to Malaysia’s economic growth for the period of 1980 - 2010 from three angles: Gross Domestic Products (GDP) growth, GDP per capita growth and technological change.

The last and sixth paper titled Productive Efficiency and Welfare Gains from Privatization in Malaysia by Taufiq Hassan, M. Kabir Hassan, Mohamed Ariff and Shamser Mohamad Ramadlilli Mohd, shows that privatized firms generally gain financially, and privatization leads to production efficiency gains since performance outcomes are largely conditioned by externalities like ownership. Our approach linking privatization to welfare gain measures reveals three interesting results. First, there is a significant positive effect on welfare gains from privatization. Second, corporate ownership control appears to condition production efficiency and welfare gains. Finally, privatized firms also gain financially. Linking privatization to welfare gain measures is an important research and policy objective since governments cite ensuring welfare as a reason for controlling privatized firms after privatization.

Abstract articles of the Journal of Economic Cooperation and Development, Vol.36 No.1 (2015)