Regional Corruption, Foreign Trade, and Environmental Pollution

Suisui Chen, Xintian Liu, Shuhong Wang () and Peng Wang
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Suisui Chen: School of Economics, Ocean University of China, Qingdao 266100, China
Xintian Liu: School of Economics, Ocean University of China, Qingdao 266100, China
Shuhong Wang: Institute of Marine Economy and Management, Shandong University of Finance and Economics, Jinan 250220, China
Peng Wang: School of Business, Nankai University, Tianjin 300071, China

Sustainability, 2023, vol. 15, issue 1, 1-17

Abstract: As an effective means and an important guarantee for environmental pollution management in China, enhancing the level of foreign openness and reducing the level of regional corruption, respectively, the successful implementation of both are key steps in determining the future development of China’s transformation of trade development and green transformation. This paper attempts to systematically examine the mechanisms of regional corruption and foreign trade on environmental pollution from both theoretical and empirical levels. Using the panel data of 30 provinces in China from 2004 to 2017, this study constructs a dynamic panel model with a one-stage pollution index. The system GMM is used to verify the relationship between corruption, trade, and the environment. Empirical results show that corruption reduces investment in environmental governance, R&D, and the introduction of environmental technology, and it increases environmental pollution by reducing the implementation and control of environmental policies. After excluding the effect of corruption on trade, foreign trade is conducive to the improvement of environmental pollution. Meanwhile, the intensification of corruption on pollution will be weakened with increased openness; that is, China’s expansion of foreign trade is beneficial to attenuating the pollution effect of corruption on the environment. These findings suggest that expanding trade will ultimately improve the environment and even mitigate the negative impact of corruption on the environment. Therefore, China should dredge the channel of factor flow, give full play to the vitality of market players, strictly investigate corruption, and encourage opening up.

Keywords: corruption; foreign trade; environmental pollution; China; dynamic panel model; empirical testing (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (2)

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