Environmental pollution, energy import, and economic growth: evidence of sustainable growth in South Africa and Nigeria

Abstract

Simultaneous achievement of sustainable development goals (SDGs), especially energy efficiency (SDG 7), economic growth (SDG 8), and pollution reduction (SDG 13), has been a major challenge among the developing countries. Besides, there is absence of a study which quantifies clean production (net growth-emission effects) and energy import efficiency (net growth-energy import effects) as indicators of sustainable growth. Thus, this current study examines this issue for South Africa and Nigeria at aggregate and sectoral levels between 1981and 2015 using simultaneous equation models and threshold regression analysis. Evidence of the sustainable growth cannot be established for South Africa and Nigeria with and without structural break. Further, the analysis shows that, with respect to Nigeria, keeping petroleum import per capita above the respective threshold enhances the environmental quality as aggregate and sectoral outputs increase. However, the CO2 emission can only induce increased GDP per capita when the petroleum import is below the threshold level. In South Africa's case, although maintaining petroleum import beyond the threshold may increase CO2 emission per capita associated with high aggregate output per capita, such emission exhibits a negligible reverse impact on output per capita. Results are found to vary across both lower and upper threshold regimes for sectors. Policy recommendations are discussed in the conclusion.