Economic development thresholds for a green economy in sub-Saharan Africa

Simplice A Asongu,Nicholas M Odhiambo

doi:10.1177/0144598719835591

Simplice A Asongu, Nicholas M Odhiambo

Open Access

https://doi.org/10.1177/0144598719835591

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Journal: Energy Exploration & Exploitation	Publication Date: Mar 13, 2019
Citations: 52	License type: CC BY 4.0

Affiliation: University of South Africa

Abstract

This study investigates how increasing economic development affects the green economy in terms of CO2emissions, using data from 44 countries in the sub-Saharan Africa for the period 2000–2012. The Generalized Method of Moments is used for the empirical analysis. The following main findings are established. First, relative to CO2emissions, enhancing economic growth and population growth engenders a U-shaped pattern whereas increasing inclusive human development shows a Kuznets curve. Second, increasing gross domestic product growth beyond 25% of annual growth is unfavorable for a green economy. Third, a population growth rate of above 3.089% (i.e. annual %) has a positive effect of CO2emissions. Fourth, an inequality-adjusted human development index of above 0.4969 is beneficial for a green economy because it is associated with a reduction in CO2emissions. The established critical masses have policy relevance because they are situated within the policy ranges of adopted economic development dynamics.

Highlights

This study has investigated how increasing economic development affects the green economy in terms of CO2 emissions, using data from 44 countries in the sub-Saharan Africa (SSA) region for the period 2000–2012
The Generalized Method of Moments (GMM) is used for the empirical analysis
There is a U-shaped pattern between two indicators of economic development and CO2 emissions, while there is a Kuznets nexus between inclusive human development and CO2 emissions

Summary

Introduction

While the theoretical underpinning of the EKC hypothesis has been substantially documented in the literature (Akbostanci and Turut-Asi Tunc, 2009; Diao et al, 2009; He and Richard, 2010), the theory-building contribution of this study relates to the establishment of specific thresholds at which macroeconomic outcomes can either positively or negatively influence environmental degradation. The study focuses on 44 nations in the SSA region for the period 2000–20122 with data from three main sources, namely: (i) the World Development Indicators of the World Bank for the dependent variable (i.e. CO2 emissions), two independent variables of interest (i.e. economic growth and population growth) and a control variable (education quality); (ii) the World Governance Indicators of the World Bank for a control variable (i.e. regulatory quality) and (iii) the United Nations Development Programme (UNDP) for an independent variable of interest (i.e. the inequality-adjusted human development index, IHDI).

Methodology

Conclusion and future research directions

Findings

The 44 countries are as follows