Corruption, Income and the Environment: An Empirical Analysis

In response to the recent growth of a largely theoretical body of literature analysing the linkages between corruption and pollution this paper subjects the corruption-pollution relationship to a detailed empirical examination. A distinction is drawn between the direct impact of corruption on pollution and the indirect impact which operates through corruption's impact on per capita income and the resultant impact of income on pollution. Using data for 94 countries covering the period 1987-2000, both direct and indirect impacts of corruption on air pollution emissions are estimated. For both sulfur dioxide and carbon dioxide, corruption is estimated to have a positive direct impact on per capita emissions. Indirect effects are found to be negative and larger in absolute value than direct effects for the majority of the sample income range. As a result, the total effect of corruption on emissions is negative for all but the highest income countries in the sample. (C) 2006 Elsevier B.V. All rights reserved.