This dissertation studies how society views corruption at different stages of economic development. It develops a theoretical framework that shows that at low levels of income or development, corruption increases and at high levels of income and development, corruption decreases. This theoretical proposition is also investigated empirically. The empirical analyses support the proposed theory and hint that fiscal policy, socioeconomic conditions, and incidences of war play significant roles in determining a country’s corruption level. In addition, this dissertation also explores the relationship between merchandise and service trade. I show theoretically that the two are related and determined simultaneously. An empirical investigation also confirms this proposition. Lastly, I investigate the issue of pollution in developing countries. I explore the existence of an inverted u-shaped relationship between emissions and income. I examine the role played by foreign investment in improving emissions in developing countries. The results support the inverted u-shaped relationship and suggest that environmental aid does not reduce emissions in developing countries.