Economic and financial crime in the forestry industry – developed vs. developing countries

Abstract

Wood is one of the most important natural resources, used in construction and fencing, art (artworks and musical instruments), household uses (utensils and hand tools), wooden toys, furniture, shipbuilding, fuel, and stationary. Therefore, deforestation is an indispensable process to our society. However, deforestation does not have to mean smaller forestland, as it should be accompanied by afforestation. But this does not happen, partially due to illegal deforestation, that raises the deforestation level much higher than the sustainable one, and partially due to laws that permit legal deforestation to be above the durable limit, obviously for economic and political reasons The aim of this paper is to study the differences in the influence that economic and financial crimes (corruption, shadow economy, and money laundering) have on the rate of deforestation in developing versus developed countries. Recent data (from 2012 to 2020) is used for 185 countries from all over the world, in order to obtain updated and relevant results. The practical use of the findings is given by their relevance in finding efficient, adapted, and effective solutions for unsustainable deforestation (legal or not), for pollution, and for a cleaner air and environment, and for a better understanding of this phenomenon, by addressing it differently according to the level of development of a country. Also, this research is an attempt to raise awareness upon illegal deforestation and corruption. The regressions applied to the database show that both developed and developing countries present a direct connection between economic and financial crime and the level of deforestation, but in developed countries the influence of economic and financial crime on deforestation is lower. Therefore, the focus in reducing the deforestation by reducing the economic and financial crimes rate should be on developing countries, where the levels of corruption, shadow economy, and money-laundering are higher, and so is the deforestation rate.