Exploring the Nexus among Environmental Pollution, Economic Growth Energy Use and Foreign Direct Investment in Sub Sahara Africa

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 discloses 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 bi-directional causality between energy use and CO2 in the short-run as well as one-way causality running from energy use to CO2 in the long run. There is additionally a significant positive outcome and uni-directional 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% diminish CO2 by 46%. The positive and negative impact 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. 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.