Cultural Persistence in Corruption, Economic Growth, and the Environment

<p>Evidence that attributes current environmental outcomes to historical and cultural origins has gained momentum in recent years. In this study, I construct a model to demonstrate why the relation between economic growth and <a href="https://www.sciencedirect.com/topics/economics-econometrics-and-finance/environmental-valuation" target="_blank">environmental quality</a> hinges on the deeply rooted cultural traits that govern attitudes towards <a href="https://www.sciencedirect.com/topics/economics-econometrics-and-finance/corruption" target="_blank">corruption</a>. Specifically, I show that the cultural transmission of the traits that determine the corruptibility of public officials, who are entrusted with the inspection and reporting of firms’ emissions, leads to history-dependant outcomes. It sets in motion either a vicious circle of corruption, high pollution and low economic growth, or a virtuous circle where corruption does not infringe <a href="https://www.sciencedirect.com/topics/economics-econometrics-and-finance/environmental-policy" target="_blank">environmental policy</a>, pollution is lower and economic growth is higher. These outcomes have major policy implications. </p>