Natural resource rents, globalisation and environmental degradation: New insight from 5 richest African economies

Abstract

Environmental degradation has continued to be a significant global challenge; hence, it is consistently drawing attention from policymakers and academics. Therefore, this study further contributes to the literature by investigating the contributions of natural resource rents and globalisation to environmental degradation in the 5 richest African economies from 1990 to 2019. Four techniques were applied: the fixed and random effect, feasible generalised least squares and the augmented mean group. The Hausman test was used to affirm the supremacy of the feasible generalised least squares outcomes and, consequently, its use to derive the study inferences. A Dumitrescu and Hurlin causality test was also employed to determine the direction of causality between the subject variables. Findings from the study showed that natural resource rents significantly contribute to environmental degradation. In contrast, globalisation reduces environmental degradation. Urbanisation, which served as a control measure, enhanced environmental sustainability. Robustness checks on the study models revealed the validity and reliability of the models' inferences. The Additional outcomes from the robustness checks revealed that while economic growth has no substantial effect on environmental degradation, human capital development significantly worsens the environment. The study highlights relevant policy actions that could substantially reduce environmental degradation.