Abstract:

Economic freedoms are possible with the existance of market economy which guarantees the production, consumption and trade of goods and services. The existence of an efficient capital market, monetary stability, public spending consistent with low tax rates and current competition are needed to make the market economy real. Corruption is recognized as an extensive global problem which is incompatible with market economy and creates problems for many countries across the world. The purpose of this study is to investigate the relationships between corruption and determinants of economic freedoms in Turkey for the period of 1995-2013. According to the results of model predictions financial freedom, fiscal freedom, property rights, monetary freedom and trade freedom have led to the decline of corruption. Contrary to expectations government spending, business freedom, investment freedom and freedom from corruption have led to the increase of corruption. Johansen-Juselius co-integration analysis results have revealed that there is a long-term relationships between corruption index and economic freedom variables. According to Granger causality test results unidirectional causality has been found from corruption index to the criteria of government spending and also from fiscal freedom, business freedoms, property rights and criteria of freedom from corruption to corruption. Monetary freedom and trade freedom have a mutual causality with corruption index

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