Financial inclusion and knowledge diffusion for green growth in Sub-Saharan African countries

Abstract

This article examines the associated and interactive effects of financial inclusion measured through financial inclusion index and knowledge diffusion, measured through research and development (R&D), internet usage, and education, on green growth measured by CO2 emissions intensity due to production, in Sub-Saharan Africa. Based on a sample of 36 countries and data spanning the period from 2004 to 2018, the analysis employs POLS, Newey & West, and Driscoll & Kraay estimation methods. The findings reveal that financial inclusion, R&D, and internet usage exacerbate CO2 emissions intensity from production, thereby hindering green growth. Conversely, education plays a positive role by reducing production-related CO2 emissions and promoting sustainable practices. Education improves green growth, yet knowledge production through R&D deteriorates green growth when interacting with financial inclusion. Similarly, internet usage, when it interacts with financial inclusion, harms green growth. These results indicate that financial inclusion, R&D, and internet usage negatively impact green growth by increasing CO2 intensity related to production. The study recommends better alignment to green financial inclusion, sustainable R&D, and digital policies with environmental sustainability objectives while advocating for the promotion of environmental education to support green growth. To maximize sustainable development benefits, Sub-Saharan African countries need to adjust their development strategies by incorporating greener practices into financial inclusion, R&D, and digital technologies.