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Corruption, Growth, and the Environment: A Cross-Country Analysis

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  • Heinz Welsch

Abstract

The relationship between per capita income and a number of pollution indicators has been found to display an inverted U-shaped or downward-sloping pattern. Corruption may affect this relationship in two distinct ways: by raising pollution at given income levels (direct effect) and by reducing per capita income (indirect effect). The total effect is ambiguous a priori. Using cross section data for several indicators of pollution, the paper estimates the direct and the indirect effect of corruption on pollution. The indirect effect via income is positive or negative depending on the income level. If negative, the indirect effect is dominated by the positive direct effect. Overall, our measures of pollution are monotonically increasing in corruption. Because this relationship is particularly strong at low income levels, developing countries can considerably improve both their economic and environmental performance by reducing corruption.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.40636.de/dp357.pdf
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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 357.

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Length: 37 p.
Date of creation: 2003
Date of revision:
Handle: RePEc:diw:diwwpp:dp357

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Keywords: corruption; growth; pollution; environmental Kuznets curve;

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References

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Cited by:
  1. Halkos, George & Tzeremes, Nickolaos, 2012. "Public sector transparency and countries’ environmental performance: A nonparametric analysis," MPRA Paper 39553, University Library of Munich, Germany.
  2. Karen Clay & Werner Troesken, 2010. "Did Frederick Brodie Discover the World's First Environmental Kuznets Curve? Coal Smoke and the Rise and Fall of the London Fog," NBER Working Papers 15669, National Bureau of Economic Research, Inc.
  3. Halkos, George, 2012. "The impact of government expenditure on the environment: An empirical investigation," MPRA Paper 39957, University Library of Munich, Germany.
  4. Castiglione, Concetta & Infante, Davide & Smirnova, Janna, 2012. "Rule of law and its implications for the environmental taxation-income path across European Countries," MPRA Paper 39433, University Library of Munich, Germany.
  5. Hilary Sigman, 2007. "Decentralization and Environmental Quality: An International Analysis of Water Pollution," NBER Working Papers 13098, National Bureau of Economic Research, Inc.
  6. Mohammad Reza Farzanegan & Tim Mennel, 2012. "Fiscal decentralization and Pollution: Institutions Matter," MAGKS Papers on Economics 201222, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  7. Amit K. Biswas & Mohammad Reza Farzanegan & Marcel Thum, 2011. "Pollution, Shadow Economy and Corruption: Theory and Evidence," CESifo Working Paper Series 3630, CESifo Group Munich.
  8. Katrin Millock & Natalia Zugravu & Gérard Duchene, 2008. "The Factors Behind CO2 Emission Reduction in Transition Economies," Working Papers 2008.58, Fondazione Eni Enrico Mattei.
  9. Graf Lambsdorff, Johann, 2005. "Consequences and causes of corruption: What do we know from a cross-section of countries?," Passauer Diskussionspapiere, Volkswirtschaftliche Reihe V-34-05, University of Passau, Faculty of Business and Economics.
  10. Michael Lamla, 2007. "Long-run Determinants of Pollution: A Robustness Analysis," KOF Working papers 07-164, KOF Swiss Economic Institute, ETH Zurich.
  11. Chakraborty, Debashis & Mukherjee, Sacchidananda, 2010. "Relationship between Trade, Investment and Environment: A Review of Issues," MPRA Paper 23333, University Library of Munich, Germany.
  12. Leitão, Alexandra, 2010. "Corruption and the environmental Kuznets Curve: Empirical evidence for sulfur," Ecological Economics, Elsevier, vol. 69(11), pages 2191-2201, September.
  13. Siche, J.R. & Agostinho, F. & Ortega, E. & Romeiro, A., 2008. "Sustainability of nations by indices: Comparative study between environmental sustainability index, ecological footprint and the emergy performance indices," Ecological Economics, Elsevier, vol. 66(4), pages 628-637, July.
  14. Simplice A, Asongu & Oasis, Kodila-Tedika, 2013. "Fighting African Conflicts and Crimes: Which Governance Tools Matter?," MPRA Paper 44044, University Library of Munich, Germany.
  15. Meilanie Buitenzorgy & Arthur P. J. Mol, 2011. "Does Democracy Lead to a Better Environment? Deforestation and the Democratic Transition Peak," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 48(1), pages 59-70, January.
  16. Deacon, Robert & Saha, Sarani, 2005. "Public Good Provision by Dictatorships: A Survey," University of California at Santa Barbara, Economics Working Paper Series qt1jk5b0vr, Department of Economics, UC Santa Barbara.
  17. Mukherjee, Sacchidananda & Chakraborty, Debashis, 2010. "Is there any Relationship between Environment, Human Development, Political and Governance Regimes? Evidences from a Cross-Country Analysis," MPRA Paper 19968, University Library of Munich, Germany.
  18. Cole, Matthew A., 2007. "Corruption, income and the environment: An empirical analysis," Ecological Economics, Elsevier, vol. 62(3-4), pages 637-647, May.
  19. Simplice A, Asongu & Oasis, Kodila-Tedika, 2013. "Crime and conflicts in Africa: consequences of corruption?," MPRA Paper 44043, University Library of Munich, Germany.
  20. Anamika Barua & Klaus Hubacek, 2009. "An empirical analysis of the environmental Kuznets curve for water pollution in India," International Journal of Global Environmental Issues, Inderscience Enterprises Ltd, vol. 9(1), pages 50-68, January.
  21. Kodila Tedika, Oasis, 2012. "Consequences De La Corruption : Panorama Empirique
    [Consequences of Corruption : Empirical survey]    ," MPRA Paper 41482, University Library of Munich, Germany.
  22. Halkos, George & Tzeremes, Nickolaos, 2012. "Carbon dioxide emissions and governance: A nonparametric analysis for the G-20," MPRA Paper 40387, University Library of Munich, Germany.

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