Corruption, Trade and Resource Conversion

Posted: 3 Sep 2005

See all articles by Edward B. Barbier

Edward B. Barbier

Colorado State University, Fort Collins - Department of Economics

Richard Damania

World Bank; University of Adelaide - School of Economics

Daniel Leonard

Flinders University - School of Business Economics

Abstract

Recent evidence suggests that special interest groups significantly affect tropical deforestation through lobbying. We develop an open-economy model in which resource conversion is determined by a self-interested government that is susceptible to the influences of the political contributions it receives from the profit-maximizing economic agent responsible for land conversion. We investigate the effects of lobbying on the cumulative level of resource conversion and examine how trade policy influences the distortions created by political corruption. We derive testable predictions that are analyzed through a panel analysis of cumulative agricultural land expansion over 1960-99 for low and middle-income tropical countries. Our findings suggest that increased corruption and resource dependency directly promote land conversion, whereas rising terms of trade reduce conversion.

Keywords: Corruption, Developing countries, Lobbying, Open economy, Political economy, Resource conversion, Resource-trade dependency, Terms of trade

JEL Classification: Q23, Q28, D78, F19

Suggested Citation

Barbier, Edward B. and Damania, Richard and Leonard, Daniel, Corruption, Trade and Resource Conversion. Journal of Environmental Economics and Management, Vol. 50, No. 2, pp. 229-446, September 2005. Available at SSRN: https://ssrn.com/abstract=793487

Edward B. Barbier (Contact Author)

Colorado State University, Fort Collins - Department of Economics ( email )

Fort Collins, CO 80523-1771
United States

Richard Damania

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

University of Adelaide - School of Economics ( email )

Adelaide SA, 5005
Australia
+61 8 8303 4933 (Phone)
+61 8 8223 1460 (Fax)

Daniel Leonard

Flinders University - School of Business Economics ( email )

Adelaide SA 5001
Australia

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