An Analysis on the Effects of Corruption affecting CO2 Emissions in South America

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According to the World Health Organization(WHO), air pollution is the most serious problem in Latin America. The environmental destruction problems such as air pollution require government intervention, and the efficiency of the system and government is important in solving environmental problems. However, because Latin America's political and judicial systems are closely related to corruption, environmental law often does not work. Corruption also causes environmental pollution through certain sectors. Odebrecht corruption scandal is an example. Odebrecht's indiscriminately expanded construction infrastructure projects through corruption. Despite such cases of corruption and the environment, quantitative studies on the environmental impact of corruption are very rare. In addition, empirical studies on environmental pollution and carbon dioxide(CO2) emissions in South America were mainly conducted on economic growth and energy consumption. Therefore, research is needed to demonstrate the relationship between corruption and environmental pollution through quantitative studies. This study demonstrates the relationship between corruption and CO2 emissions in 12 countries in South America from 1998 to 2017 through panel data analysis. In addition, it demonstrates the relationship between CO2 and the construction infrastructure industry closely related to corruption. In this study, Control of Corruption (CC), Corruption Perception Index (CPI) and Freedom from Corruption (FC) were used as variables related to corruption, and Construction Value added (% of GDP) was used as the variable for infrastructure construction. As a method of analysis, Fixed Effect Model selected based on OLS and Hausman tests are utilized. As a result of analysis, the corruption variables CC, CPI, and FC in both the OLS and Fixed Effect Model have statistically significant negative values for CO2 emissions. The Construction variable also has a statistically significant positive value for CO2 emissions. Through the results of this study, it can be confirmed that the emission of CO2 decreases as corruption is controlled and reduced. In addition, it can be seen that CO2 emissions increase as the construction industry closely related to corruption increases.

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