Environment-energy-growth nexus in Sub-Saharan Africa: The role of intermediate goods

Abstract

This paper examines the way trade in intermediate goods may influence carbon emissions using data from 17 Sub-Saharan African countries for 1995–2013. Previous studies have discussed carbon emission drivers, but little attention has been paid to the contribution of trade in intermediate goods, which involve international production fragmentation. Using time-series techniques, our results reveal that trade in intermediate goods is a mitigating factor in carbon emissions for a panel of Sub-Saharan African countries. There is evidence here to support the Environmental Kuznets Curve hypothesis. However, the turning point appears to be higher for intermediate trade imports, suggesting that environmental concerns are taken into account differently for imports and exports. Moreover, results show long-run bidirectional causality between carbon emissions, income, and intermediate goods trade; long-run unidirectional causality running from energy consumption to income and carbon emissions; and unidirectional causality running from trade in intermediate goods to carbon emissions in the short run. These findings suggest that national authorities should encourage trade in intermediate goods, develop the use of cleaner energy sources, and focus on public awareness on energy efficiency and clean environment, since these countries have increasingly integrated global value chains, even though most remain exporters of primary products.