Trade Liberalization, Corruption and Environmental Policy Formation: Theory and Evidence

CIES Working Paper No. 0047

35 Pages Posted: 8 Dec 2000

See all articles by Richard Damania

Richard Damania

World Bank; University of Adelaide - School of Economics

Per G. Fredriksson

University of Louisville - College of Business - Department of Economics; Institute for Corruption Studies

John A. List

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Date Written: December 2000

Abstract

This study explores the linkages between trade policy, corruption, and environmental policy. We begin by presenting a theoretical model that produces several testable predictions: i) trade liberalization raises the stringency of environmental policy; ii) corruption reduces environmental policy stringency; and iii) the effect of trade liberalization (corruption) on environmental policy is conditional on the level of corruption (trade openness). Using panel data from a mix of 30 developed and developing countries from 1982-1992, these predictions are broadly supported.

Keywords: lobbying, political economy, protectionism, trade and the environment, pollution tax

JEL Classification: Q28, F18, D78

Suggested Citation

Damania, Richard and Fredriksson, Per G. and List, John A., Trade Liberalization, Corruption and Environmental Policy Formation: Theory and Evidence (December 2000). CIES Working Paper No. 0047, Available at SSRN: https://ssrn.com/abstract=253327 or http://dx.doi.org/10.2139/ssrn.253327

Richard Damania (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

University of Adelaide - School of Economics ( email )

Adelaide SA, 5005
Australia
+61 8 8303 4933 (Phone)
+61 8 8223 1460 (Fax)

Per G. Fredriksson

University of Louisville - College of Business - Department of Economics ( email )

Louisville, KY 40292
United States

Institute for Corruption Studies

Stevenson Hall 425
Normal, IL 61790-4200
United States

John A. List

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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