Corruption and carbon emission: an empirical investigation

This paper attempts to find empirical linkages between corruption and per capita carbon emissions using panel data from over 200 countries from 2005-2016. We see a negative and significant relationship between corruption and per capita CO2 emissions for all countries taken together and for upper-middle, lower-middle, and low-income groups of countries separately. However, this relationship is positive for high-income countries. We also find a significant impact of a country's overall institutional development (a factor that includes corruption) on its per capita emissions. However, this relationship is of a lower degree and less robust than corruption, indicating that corruption has a more significant impact on emissions than other institutional development indicators. We also find evidence of carbon leakage from high-income countries to low and upper-middle-income countries through relocation of manufacturing to lower/upper-middle-income countries, a sort of moral corruption not captured in reported emissions.