The effect of corruption on carbon dioxide emissions in APEC countries: A panel quantile regression analysis

- The panel data model is used for the effect of corruption on CO2 emissions in APEC.
- The effect is negative in lower emission countries but weak in higher emitters.
- There exists inverted U-shaped EKC between corruption and CO2 emissions.
- Corruption has negative direct effect and positive indirect effect on CO2 emissions.
- The total effect of corruption on CO2 emissions appears positive.

The relationship between corruption and CO2 emissions has been receiving increased attention in recent years, but little work has been conducted for the Asia-Pacific Economic Cooperation (APEC) countries even if they have determined to fight against corruption and address climate change. Using the quantile regression approach, this paper develops a panel data model for the effect of corruption on CO2 emissions in APEC countries. The empirical results show that, first of all, the effect of corruption on CO2 emissions is heterogeneous among APEC countries. Specifically, there is significant negative effect in lower emission countries, but insignificant in higher emission countries. Second, there exists an inverted U-shaped Environmental Kuznets Curve (EKC) between corruption and CO2 emissions, and the per capita GDP at the turning point of the EKC may increase when CO2 emissions increase. Finally, corruption may have not only a negative direct effect on CO2 emissions, but also a positive indirect effect through its effect on per capita GDP. The total effect appears positive, which indicates corruption may worsen environmental quality overall in APEC countries.