Environmental crime and regional development: evidence from Italian regions

This paper investigates how environmental crime shapes regional development trajectories in Italy. Using regional panel data from 2012 to 2022, the study applies a combination of panel data techniques and a dynamic panel vector autoregression (PVAR) framework to ensure the robustness of the results. The findings show that environmental crimes are associated with lower GDP and formal employment, while being linked to higher irregular employment. The analysis identifies a unidirectional predictive relationship running from environmental crime to GDP and from irregular employment to environmental crime, and a bidirectional relationship between environmental crime and formal employment. These results highlight the damaging role of environmental crime in undermining economic development, reinforcing territorial inequalities, and weakening governance capacities, consistent with its interpretation as locally embedded informal institutions and manifestations of the “dark side” of social capital. By adopting a place-based development perspective, the paper contributes to broader debates on governance, institutional quality, and uneven territorial development in Europe. It calls for integrated policy strategies that combine enforcement with institutional strengthening to foster fair competition, decent work, and inclusive regional growth. Beyond its empirical contribution, the paper also provides insights for regional development policies aimed at increasing institutional resilience and addressing informal economies as structural barriers to sustainable development.