The Corruption Paradox: Assessing Environmental Impacts in the GCC Region

Hayet, Kaddachi and Naceur, Benzina (2025): The Corruption Paradox: Assessing Environmental Impacts in the GCC Region.

Abstract

This study examines the impact of corruption on environmental quality in GCC countries from 2003 to 2021, focusing in particular on direct and indirect impacts on CO2 emissions. We use two-stage least squares (2SLS) panel regression analysis to account for potential endogeneity and provide robust empirical evidence. The results show that corruption has a direct and significant positive effect on environmental quality. This suggests that some corrupt practices can lead to short-term emission reductions by delaying or distorting large, environmentally harmful projects. However, it also has indirect negative effects: corruption undermines economic growth and institutional integrity and ultimately worsens long-term environmental impacts. Overall, the positive effects of corruption on environmental quality are positive, although they are differentiated and context-dependent. In addition, the Environmental Kuznets Curve (EKC) hypothesis is tested. This suggests that after an initial decline in emissions, environmental destruction could resume as income levels rise. These findings provide valuable insights for policymakers seeking to strengthen institutional governance, eradicate corruption, and promote sustainable environmental policies in resource-dependent economies.

• Item Type: MPRA Paper
• Language: English
• Keywords: Corruption, environmental quality, CO2 emissions, EKC, Economic Growth
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q51 - Valuation of Environmental Effects

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