Does FDI and economic growth harm environment? Evidence from selected West African countries

Abstract

This study examines the effect of FDI, economic growth, energy consumption, human capital and biocapacity on carbon emissions in selected West African countries over the period 1970–2017. Employing the long run cointegration estimators, the empirical results confirmed the existence of U-shaped and N-shaped pattern between the estimated variables on CO₂ emissions. However, the panel quantile estimates revealed that N-shaped exists only for high carbon emissions countries, but not in the middle and low carbon emissions nations. In addition, the results provide evidence of inverted U-shaped relationship between growth and CO₂ emissions and this point to the fact that the EKC hypothesis is valid for ECOWAS countries. The panel quantile causality results indicated that FDI, biocapacity, energy consumption and human capital cause carbon emissions in all the estimated quantiles. The study provided suggestions for policymaking towards reducing carbon emissions in the region.

Keywords:

• FDI
• energy consumption
• economic growth
• human capital
• West Africa

JEL CODE:

• C50
• Q01
• Q52

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This research was funded by the Ministry of Higher Education Malaysia under the Fundamental Research Grant Scheme (FRGS) vote number 4F980.

Notes on contributors

Ahmed Malumfashi Halliru

Ahmed Malumfashi Halliru obtained first and second degree in Economics and currently pursuing a PhD degree in Universiti Technologi Malaysia. A lecturer in the department of Economics, Umaru Musa Yar'adua University Katsina, Nigeria. Area of research interest are environmental and development economics.

Nanthakumar Loganathan

Nanthakumar Loganathan currently attached with Azman Hashim International Business School, Universiti Teknologi Malaysia and his research field mainly focus with Development Economics.

Asan Ali Golam Hassan

Asan Ali Golam Hassan is attached with Azman Hashim International Business School, Universiti Teknologi Malaysia. His research field is mainly focus with Economic Planning, Regional Economic Development and Development Economics.