The relationship between economic growth and environmental sustainability : evidence from selected Sub-Sahara African countries

Abstract

Ensuring environmental sustainability amidst the quest to stimulate growth in Sub-Saharan Africa (SSA) remains an issue of great concern. In spite of this, the evidence for SSA is sparse, both at the theoretical and empirical level as literature has not adequately interrogated the effects of economic growth processes on the sustainability of the environment in SSA. Using a panel dataset from 1985-2010 covering 35 Sub Saharan Africa (SSA) countries, this study examined the environmental impact of economic growth and growth-enhancing factors such as trade openness, Foreign Direct Investment (FDI) and industrialization under the Environmental Kuznet Curve (EKC) framework. The environmental variables employed are CO2 emissions, Adjusted Net Savings (ANS) and energy consumption per capita. Employing the system Generalized Method of Moment, trade openness was found to reduce pollution/degradation through reduced CO2 emissions and energy consumption per capita while at the same time reducing environmental sustainability of SSA through reduced ANS. Industrialization was also found to unambiguously harm the environment while rapid urbanization is revealed to increase pollution/degradation through increased CO2 emissions and energy consumption. FDI is the only component found to be accompanied by a fall in pollution/environmental degradation through reduced CO2 emissions and energy consumption and a rise in environmental sustainability through increased ANS. Finally, while the Environmental Kuznet Curve (EKC) is confirmed for ANS and energy consumption, it is not established for CO2 emissions.