Abstract
African countries are committed to the creation of free trade areas as a means of consolidating trade links between African nations. Intra-African trade is expected to boost economic growth and improve macroeconomic performance and living standards in Africa. However, theoretical insights and empirical evidence suggest that these efforts risk being undermined by the adverse environmental consequences of trade, which are likely to undermine the continent's achievements in terms of sustainable development and poverty reduction. This paper aims to examine the environmental impact of intra-African trade while integrating FDI, economic growth, urbanization, and energy consumption. The study used a panel data set for 32 African countries over the period 1990-2020. The empirical analysis was based on the latest panel estimation techniques. More specifically, we used the Dumitrescu-Hurlin causality test, the second generation of unit root tests on panel data, and the PMG estimator to estimate an ARDL panel. The error correction term reveals the existence of a cointegrating relationship between CO2 and trade, FDI, and the other control variables. The results suggest that intra-African trade worsens environmental quality in Africa in the long term. Similarly, FDI has a similar ecological impact, corroborating the ‘pollution heaven’ hypothesis. The results also refute the Environmental Kuznets Curve (EKC) hypothesis. Energy consumption plays a key role in the long-term deterioration of the environment. Finally, urbanization degrades the environment in line with the intuition of urban environmental transition theory.
Published Version
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