Does corruption pollute the wheel? An analysis for OECD countries

Abstract

This paper discusses the conflictive relationship between corruption and the implementation of rigorous environmental policies. According to our initial hypothesis, the higher the degree of corruption, the more likely it is that governments defend individual interests rather than environmental goals established to benefit society. Using panel data of 34 OECD members from 1996 to 2020, we investigate the potential determinants of the updated Environmental Policy Stringency index. This is a contribution from previous analysis, since the sample is significantly extended, and the analysis disaggregates among the three dimensions of the index. The estimation of the fixed-effects model confirms our assumption: perceived corruption negatively affects the development of ambitious policies in the environmental field. Specifically, more corrupt cabinets apply laxer market-based instruments and fewer technology support policies. Our empirical outcomes also hint at significant connections between other political, institutional, social or economic factors and the strictness of environmental policies.