The impact of financial development and foreign direct investment on environmental sustainability in Sub-Saharan Africa: using PMG-ARDL approach

Abstract

This study is aimed at establishing the impact of foreign direct investment and financial development on carbon dioxide emission and clean energy using 44 countries in sub-Saharan Africa ranging from 1998 to 2017. Employing a second generation unit root test in conjunction with Pooled Mean Group, the study established that financial development have significant positive impact on clean energy consumption in sub-Saharan Africa. This was found to be consistent in both low-income and middle-income countries in sub-Saharan Africa. Financial development is however found to be significantly negative with carbon dioxide in sub-Saharan Africa and middle-income countries. This relationship is only positive in the low-income countries. Foreign direct investment does not have any significant impact on clean energy consumption in sub-Saharan Africa. A significant impact is noted after the decomposition of the sample into low-income and high-income countries. In low-income countries, foreign direct investment inflows impact positively on clean energy consumption. This relationship is however negative with middle-income countries. The link between foreign direct investment and carbon dioxide is significantly positive in the whole sample and also in low-income countries. These long-run relationships have been confirmed by the causality test.

Does industrialization promote the emission mitigation agenda of East Africa? a pathway toward environmental sustainability

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The relationship between electricity consumption, trade, and GDP and the effect of COVID-19: a panel ARDL approach on the Visegrad countries

“…The ARDL methodology is the most often used methodology for similar studies. We used the same steps as (Attiaoui and Boufateh, 2019;Hotak et al, 2020;Nyeadi, 2023), who constructed their empirical application starting with the firstgeneration unit root tests and then cointegration tests (such as Pedroni and Kao, 1999) and the PMG model. Hotak et al (2020) state that the reason for using the PMG model is "in addition, the possible correlation between the mean-differenced independent variables and the white noise term may cause standard autoregressive distributed lag (ARDL) models to suffer from biased estimators in panel data models with fixed effects.…”

Heterogenous Effect of Industrialisation on Environmental Degradation in Southern African Customs Union (SACU) Countries: Quantile Analysis

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