Investigating the nexus among environmental pollution, economic growth, energy use, and foreign direct investment in 6 selected sub-Saharan African countries

Abstract

This research seeks to enhance the current literature by exploring the nexus among environmental contamination, economic growth, energy use, and foreign direct investment in 6 selected sub-Saharan African nations for a time of 34 years (1980-2014). By applying panel unit root (CADF and CIPS, cross-sectional independence test), panel cointegration (Pedroni and Kao cointegration test, panel PP, panel ADF), Hausman poolability test, and an auto-regressive distributed lag procedure in view of the pooled mean group estimation (ARDL/PMG), experimental findings disclose that alluding to the related probability values, the null hypothesis of cross-sectional independence for all variables is rejected because they are not stationary at levels but rather stationary at their first difference. The variables are altogether integrated at the same order I(1). Findings revealed that there is a confirmation of a bidirectional causality between energy use and CO₂ in the short-run and one-way causality running from energy use to CO₂ in the long run. There is additionally a significant positive outcome and unidirectional causality from CO₂ to foreign direct investment in the long run yet no causal relationship in the short run. An increase in energy use by 1% causes an increase in CO₂ by 49%. An increase in economic growth by 1% causes an increment in CO₂ by 16% and an increase in economic growth squared by 1% diminishes CO₂ by 46%. The positive and negative impacts of economic growth and its square approve the EKC theory. To guarantee sustainable economic development goal, more strict laws like sequestration ought to be worked out, use of sustainable power source ought to be stressed, and GDP ought to be multiplied to diminish CO₂ by the utilization of eco-technology for instance carbon capturing, to save lives and also to maintain a green environment.

Keywords: Carbon emissions; Cross-sectional augmented Dickey-Fuller; Economic growth; Energy use; Foreign direct investment; Health; Pool mean group estimator; Sub-Saharan Africa.