Investigating the Growth Effect of Carbon-Intensive Economic Activities on Economic Growth: Evidence from Angola

Abstract

Despite its immense natural resources, Angola struggles to significantly improve its economy to reduce poverty. Carbon emissions have been increasing over the years, even though the country plans to reduce them by 35% by 2030. This paper attempts to assess the carbon emissions of several sectors (industries, transport, services, and residences) on economic growth, intending to find a balance between environmental protection that requires carbon emissions reduction and economic development that may add to environmental degradation. The study employed time series data on GDP, CO2, CH4, and N2O covering 1971 to 2021 and ARDL and ECM models. This is the first study at the state level in Angola on the relationship between economic development and environmental sustainability considering methane and nitrous oxide emissions. Additionally, the paper assesses the responses of GDP to deviation shock of GDP, CO2, CH4, and N2O by 2032. Phillip Perron and Augmented Dickey-Fuller tests showed that all the data are stationary at the first difference, favoring the application of the ARDL model to explore the short and long-run relationships. The result reveals that methane from agricultural activities and carbon emissions from the building sector and public services contribute to economic growth, whereas carbon emissions from industrial heat systems, non-renewable electricity production, and manufacturing industries harm economic growth. However, no relationship exists between nitrous oxide emissions and economic development. In addition, impulse response function estimates show that appropriate investments can sustain economic development over the years. Therefore, the country should diversify its economy and avoid polluting fuel sources, such as coal. Raising renewable energy’s proportion in the total energy mix can support growth while considering the environmental quality. Investments in skills training, academic projects in renewable energy technologies development, agriculture mechanization, and sustainable job creation are recommended. Additionally, investing in quality seeds adapted to climate realities might help lessen climate change’s adverse effects and promote growth. Manure manufacturing processes must be improved to reduce agriculture and livestock’s methane and nitrous oxide emissions. The country’s leaders are encouraged to promote raw material processing industries while insisting on reducing carbon emissions.

Labor linkages and flow paths of industry in China

“…Some of the literature evaluates how carbon emissions affect economic growth in various sectors. Certain researchers employ a spatial panel econometric model to study how regional industrial shifts influence carbon emissions at the provincial level [ 22 ]. The literature has increasingly incorporated regional economic linkages, carbon transfer, and industrial transfer-induced labor mobility into the same research framework as investigations have advanced.…”

Assessment of the potential for sustainable sugarcane production for bioenergy in Angola

“…Oil production and its supporting activities contribute to approximately 50% of GDP, more than 70% of government revenues, and more than 90% of the country's exports [20,22] The unemployment rate in Angola reaches almost half of the population, and approximately 70% of Angolans live below the poverty line (with less than US$ 2 per day), with poverty being more prevalent in rural areas (58%) than in urban areas (19%) [20]. Rapid industrialization and urbanization have led Angola to become a major consumer of energy, and its energy expansion has caused much concern [23]. Access to energy is a particular difficulty in Angola.…”