The Interconnection of Economic Growth, Carbon Dioxide Emission, Foreign Direct Investment and Energy Consumption: Evidence from Sub-Saharan Africa

Abstract

This study examines how economic growth, carbon dioxide (CO 2 ) emissions, foreign direct investment (FDI), and energy consumption relate to each other in Sub-Saharan African (SSA) region by employing the quantile regression model to guesstimate the point coefficients of the explanatory variables on the response variables for a range of quantiles from 0.01 to 0.99. The researchers make use of data from 17 SSA countries, with the years ranging from 1975 to 2018. The study reveals a dynamic result for the estimated regression parameters of the quantile regression models for all the respective explanatory variables at varied quantiles. The effect of FDI inflow on economic growth is statistically significant at quantiles 0.1, 0.4 to 0.8 but not statistically significant at quantiles 0.2, 0.3, and 0.9 at 1% and 5% significance levels. Also, the effects of energy consumption on economic growth and the effect of CO 2 emissions on economic growth are statistically significant at quantiles of 0.1, 0.2, and 0.7 at 1% and 5% significance levels. Furthermore, the result established that the coefficients for FDI inflow, energy consumption, and CO 2 emissions are positive across all the specified quantiles except for quantile 0.1 for FDI inflow, which is negative. Evidently, there exists an asymmetric relationship between economic growth and its explanatory variables (FDI inflow, energy consumption, and CO 2 emissions) at diverse quantile levels in its restrictive distribution. The study recommends that governments in the various regions should authorize the environmental agencies to act within the power given to them by the constitution. Also, less polluting foreign production techniques such as greener energy should also be sought after.

Human development, corruption control, and foreign direct investment revisited: the case of sub-Saharan Africa

“…Hakimi & Hamdi (2017) argue that corruption is said to undermine the progress of government institutions and policies; this therefore calls for measures to control corruption, commonly known as anti-corruption (Hakimi & Hamdi, 2017). Government institutions' inaction to protect the environment in which these FDIs operate is another form of corruption on its own, as Boohene & Darkwah (2023) note that FDI contributes significantly to carbon emissions and energy consumption in the region. When laws are established and are not being instituted, it only means someone is been paid to turn a blind eye.…”