Empirical Economic Bulletin, An Undergraduate Journal


This paper investigates government influence and factors that may increase the rate of deforestation in Latin American countries. An empirical analysis will be conducted to measure the change in deforestation rates based on several potential influences. The analysis will look specifically at countries in Latin America that have a high level of deforestation including Argentina, Bolivia, Brazil, Columbia, Paraguay, Peru, and Venezuela from 1996 until 2011. Variables studied include accessibility, suitability for agriculture production, corruption perception, government effectiveness, political stability, GDP per capita, foreign direct investment, and trade openness. The results show that as more forest cover is lost, and higher rates of deforestation occur, the government institution becomes more corrupt and less politically stable. Additionally, when there is less foreign direct investment, there is also lower rates of deforestation due to the recently diminished levels of natural resources in the area.