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Governance quality vs. stimulus size: fiscal policy effectiveness during the COVID-19 pandemic
Mert Topcu* 
Mert Topcu
Affiliation: Alanya Alaaddin Keykubat University, Faculty of Economics, Administrative and Social Sciences, Department of Economics, Antalya, Türkiye
 0000-0001-8236-9810
Correspondence
mert.topcu@alanya.edu.tr
Mustafa Alpin Gulsen *
Mustafa Alpin Gulsen
Affiliation: Alanya Alaaddin Keykubat University, Faculty of Economics, Administrative and Social Sciences, Department of Economics, Antalya, Türkiye
0000-0002-2860-4469
Article | Year: 2025 | Pages: 251 - 272 | Volume: 49 | Issue: 2 Received: December 25, 2024 | Accepted: March 23, 2025 | Published online: June 7, 2025
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FULL ARTICLE
FIGURES & DATA
REFERENCES
CROSSMARK POLICY
METRICS
LICENCING
PDF
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Principle component
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Proportion of variance
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Cumulative proportion
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PC1
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85.1
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85.1
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PC2
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6.7
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91.9
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PC3
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4.5
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96.5
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PC4
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2.0
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98.6
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PC5
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0.8
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99.4
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PC6
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0.5
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100.0
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Source: Authors’ calculation.
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Variables
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Obs.
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Mean
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Std. dev.
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Min.
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Max.
|
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Growth
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144
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-0.010
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0.053
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-0.179
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0.165
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Capital
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144
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7.116
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1.541
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2.978
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10.561
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Education
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143
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2.079
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0.457
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0.470
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2.653
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Lockdown policy
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144
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3.988
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0.451
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1.868
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4.497
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Fiscal stimulus
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144
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2.293
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1.211
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-1.647
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8.202
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Governance quality
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144
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-0.150
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1.379
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-2.304
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2.222
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|
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Growth
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Capital
|
Education
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Lockdown policy
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Fiscal stimulus
|
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Growth
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1.000
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|
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|
|
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Capital
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0.187
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1.000
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|
|
|
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Education
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0.191
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0.690
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1.000
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|
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Lockdown policy
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-0.163
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0.416
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0.435
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1.000
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|
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Fiscal stimulus
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0.048
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0.436
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0.376
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0.227
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1.000
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Panel A: Full Sample
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Panel B: Robustness Check
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Regimes
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Coefficients
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Coefficients
|
|
Regime 1
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-0.045***
(0.009)
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-0.027**
(0.014)
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-0.040***
(0.012)
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-0.041***
(0.015)
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Regime 2
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0.017
(0.015)
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0.001
(0.013)
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0.038
(0.018)
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0.002
(0.016)
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Regime 3
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-
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0.039**
(0.019)
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-
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0.039**
(0.019)
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Threshold variable
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fiscal stimulus
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δ
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fiscal stimulus
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δ
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Threshold order
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1: 1.395
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1: -0.736
2: 0.145
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1: 1.798
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1: -0.761
2: 0.145
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Note: Regressions include a regime varying constant. The results of regime-varying control variables are not reported. δ is an interaction of governance quality with the reverse of the fiscal stimulus. White-corrected standard errors in parentheses. *** and ** indicate significance at 1% and 5% levels, respectively. The maximum number of thresholds has been set to 2. Source: Authors’ calculation.
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Below threshold value 1
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Above threshold value 2
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Angola
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Gabon
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Myanmar
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Algeria
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Denmark
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Israel
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Saudi Arabia
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Bangladesh
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Haiti
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Nicaragua
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Australia
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Estonia
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Jamaica
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Slovak Republic
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Belarus
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Iraq
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Nigeria
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Austria
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Finland
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Malaysia
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South Korea
|
|
Central African Republic
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Kenya
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Republic of Congo
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Belgium
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France
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Mauritius
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Spain
|
|
Chad
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Laos
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Tajikistan
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Botswana
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Georgia
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Namibia
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Sweden
|
|
Democratic Congo
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Liberia
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Tanzania
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Canada
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Germany
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Netherlands
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Switzerland
|
|
Ecuador
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Libya
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Turkmenistan
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Chile
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Hong Kong
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New Zealand
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United Arab Emirates
|
|
Egypt
|
Malawi
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Uzbekistan
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Costa Rica
|
Hungary
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Norway
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United Kingdom
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Eswatini
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Mali
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Zimbabwe
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Czech Republic
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Ireland
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Portugal
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Uruguay
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Source: Authors’ calculation.
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Albania
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Burundi
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Egypt
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Hong Kong
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Latvia
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Nepal
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Romania
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Tanzania
|
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Algeria
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Cambodia
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El Salvador
|
Hungary
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Lesotho
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Netherlands
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Russia
|
Thailand
|
|
Angola
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Cameroon
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Eritrea
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India
|
Liberia
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New Zealand
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Rwanda
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Togo
|
|
Argentina
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Canada
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Estonia
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Indonesia
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Libya
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Nicaragua
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Saudi Arabia
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Trinidad Tobago
|
|
Australia
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Central African Republic
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Eswatini
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Iran
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Lithuania
|
Niger
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Senegal
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Tunisia
|
|
Austria
|
Chad
|
Ethiopia
|
Iraq
|
Madagascar
|
Nigeria
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Serbia
|
Turkey
|
|
Azerbaijan
|
Chile
|
Finland
|
Ireland
|
Malawi
|
Norway
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Sierra Leone
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Turkmenistan
|
|
Bahrain
|
China
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France
|
Israel
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Malaysia
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Oman
|
Singapore
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UAE
|
|
Bangladesh
|
Colombia
|
Gabon
|
Italy
|
Mali
|
Pakistan
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Slovak Republic
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Uganda
|
|
Belarus
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Costa Rica
|
Gambia
|
Jamaica
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Mauritania
|
Panama
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Slovenia
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UK
|
|
Belgium
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Cote Ivory
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Georgia
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Japan
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Mauritius
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Papua New Guinea
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South Africa
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Ukraine
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|
Benin
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Croatia
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Germany
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Jordan
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Mexico
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Paraguay
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South Korea
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United States
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Bolivia
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Cyprus
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Ghana
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Kazakhstan
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Moldova
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Peru
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Spain
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Uruguay
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Bosnia and Herzegovina
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Czech Republic
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Greece
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Kenya
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Mongolia
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Philippines
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Sri Lanka
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Uzbekistan
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Botswana
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Democratic Republic of Congo
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Guatemala
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Kosovo
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Morocco
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Poland
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Sudan
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Vietnam
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Brazil
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Denmark
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Guinea
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Kuwait
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Mozambique
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Portugal
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Sweden
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Yemen
|
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Bulgaria
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Dominican Republic
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Haiti
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Kyrgyz Republic
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Myanmar
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Qatar
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Switzerland
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Zambia
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Burkina Faso
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Ecuador
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Honduras
|
Laos
|
Namibia
|
Republic of Congo
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Tajikistan
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Zimbabwe
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June, 2025
II/2025
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