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

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