Inclusive growth and the sophisticated influence of carbon emissions, renewable energy, and financial development: An introspective analysis of Africa

ABSTRACT

This study investigates how inclusive growth is affected by carbon emission, renewable energy, and the new financial development index using 48 African countries categorized into low-income countries (LIC) and middle-income countries (MIC) spanning from 2000 to 2018. Bearing in mind the presence of residual cross-sectional reliance and heterogeneity in a panel data settings, the study employed robust estimations econometric approaches which includes the Augmented Mean group (AMG), Driscoll-Kraay (DK) standard errors method together with the Correlated Effects Mean Group (CCEMG) technique. The study’s outcomes from the mentioned approaches showed that; carbon emission positively affects inclusive growth in aggregate African panel, and LIC but not in MIC panels correspondingly. Furthermore, renewable energy significantly mitigates inclusive growth in LIC group African nations, but not significant in Africa as a whole or in MIC country grouping. Financial development is homogeneously positive and significant, with inclusive growth across all panels of African economies. The outlined outcomes were also confirmed by the Generalized Method of Moments (System-GMM). Based on the outlined study preferably suggest that carbon emission in LIC must be focused on attracting investments with low carbon footprints. On renewable energy, it is further recommended that both LIC and MIC should sticks to the African Renewable Energy Initiative.

KEYWORDS:

• Africa
• carbon emission
• financial development
• inclusive growth
• renewable energy

Highlights

• Carbon emission supports inclusive growth in Africa as a whole.

• Renewable energy significantly reduces inclusive growth in low-income countries.

• Financial development significantly improves inclusive growth in Africa as a whole and middle-income countries.

• Middle-income countries do not significantly benefit from carbon emission.

Availability of data and materials

The datasets used and/or analyzed during the current study are available from the corresponding author on reasonable request.

Acknowledgments

The study is grateful to The National Natural Science Foundation of China (71973054) for the support.

Disclosure statement

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

Authors’ contributions

Conceptualization, and formal analysis and investigation was done by Easmond Baah Nketia; Methodology was performed by Kingsley Anfom. The original draft was prepared by Sabina Ampon-Wireko. Resources and software codes were provided by Isaac Adjei Mensah. The funding acquisition and Supervision was by Yusheng Kong. All authors were involved in the review and editing process. All authors read and approved the final manuscript.

Notes

¹ List of countries under the study as well as, LIC and MIC groups are in Appendix A

² Groupings of LIC and MIC are based on World Bank’s groupings (World Bank 2020)

Additional information

Funding

This work was supported by the National Natural Science Foundation of China. [71973054].