Skip to main content

Advertisement

SpringerLink
Log in

Linking external debt and renewable energy to environmental sustainability in heavily indebted poor countries: new insights from advanced panel estimators

  • Research Article
  • Published:
Environmental Science and Pollution Research Aims and scope Submit manuscript

Abstract

There are numerous studies on the linkage between renewable energy and environmental sustainability. These studies have tried to show how renewable energy is relevant in curbing the environmental difficulties associated with climate change. However, the role of external debt is seldom considered in the nexus. As such, this study applies advanced estimation techniques compatible with two core panel data issues (cross-sectional dependence and heterogeneity) to investigate the role of external debt in the growth-energy-emissions relationship in thirty-three heavily indebted poor countries (HIPC) from 1990 to 2015. The findings of the study reveal that economic growth increases emissions thereby degrading the environment, while renewable energy ensures environmental sustainability by abating CO2 emissions. Further findings from the study suggest that external debt increases CO2 emissions in HIPC across the three estimators. The country-wise results reveal that economic growth deteriorates the environment in all the countries except in Burkina Faso, Congo, Mali, Mauritania, Nicaragua, and The Gambia. Also, the result reveals a bidirectional causal relationship between external debt and economic growth, CO2 emissions and economic growth, external debt and CO2 emissions, and renewable energy and economic growth. This study argues that the consumption of clean energy sources and strong institutional quality could help mitigate the trade-offs between economic growth and environmental quality and also curtail the negative effects of external debt on the environment. The limitations of the study and directions for future research are discussed.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3
Fig. 4

Similar content being viewed by others

Data availability

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

Code availability

Available on reasonable request.

Notes

  1. We dropped Afghanistan, Eritrea, Liberia, Niger, Somalia, and Sao Tome and Principe due to missing values.

  2. This test is appropriate for series with the presence of common shocks.

  3. We utilize the Ditzen (2018) procedure, an improved version of Chudik and Pesaran (2015), which accommodates the pooled mean group variant for long-run homogenous slope coefficients.

References

  • Adeleye BN, Adedoyin F, Nathaniel S (2021) The criticality of ICT-trade nexus on economic and inclusive growth. Inf Technol Dev 27(2):293–313

  • Ahmed Z, Nathaniel SP, Shahbaz M (2021) The criticality of information and communication technology and human capital in environmental sustainability: evidence from Latin American and Caribbean countries. J Clean Prod 286:125529

    Article  Google Scholar 

  • Ali HS, Nathaniel SP, Uzuner G, Bekun FV, Sarkodie SA (2020) Trivariate modelling of the nexus between electricity consumption, urbanization and economic growth in Nigeria: fresh insights from Maki Cointegration and causality tests. Heliyon 6(2):e03400

    Article  Google Scholar 

  • Álvarez-Herránz A, Balsalobre D, Cantos JM, Shahbaz M (2017) Energy innovations-GHG emissions nexus: fresh empirical evidence from OECD countries. Energy Policy 101:90–100

  • Anser MK, Apergis N, Syed QR, Alola AA (2021) Exploring a new perspective of sustainable development drive through environmental Phillips curve in the case of the BRICST countries. Environ Sci Pollut Res:1–11

  • Apergis N (2016) Environmental Kuznets curves: New evidence on both panel and country-level CO2 emissions. Energy Econ 54:263–271

    Article  Google Scholar 

  • Arnaut J, Lidman J (2021) Environmental sustainability and economic growth in Greenland: testing the environmental Kuznets curve. Sustainability 13(3):1228

    Article  Google Scholar 

  • Avtar R, Tripathi S, Aggarwal AK, Kumar P (2019) Population-urbanisation-energy nexus: a review. Resources 8(3):136–121

    Article  Google Scholar 

  • Azam A, Rafiq M, Shafique M, Zhang H, Yuan J (2021) Analyzing the effect of natural gas, nuclear energy and renewable energy on GDP and carbon emissions: a multi-variate panel data analysis. Energy 219:119592

    Article  CAS  Google Scholar 

  • Bah MM, Abdulwakil MM, Azam M (2019) Income heterogeneity and the environmental Kuznets curve hypothesis in Sub-Saharan African countries. Geojounal 85:617–628

    Google Scholar 

  • Başar S, Tosun B (2021) Environmental Pollution Index and economic growth: evidence from OECD countries. Environ Sci Pollut Res:1–10

  • Bese E, Friday SH, Ozden C (2021) The effect of external debt on emissions: evidence from China. Int J Energy Econ Policy 11(1):440–447

    Article  Google Scholar 

  • Bilgili F, Nathaniel SP, Kuşkaya S, Kassouri Y (2021) Environmental pollution and energy research and development: an Environmental Kuznets Curve model through quantile simulation approach. Environ Sci Pollut Res:1–16

  • Bishoge OK, Kombe GG, Mvile BN (2020) Renewable energy for sustainable development in sub-Saharan African countries: challenges and way forward. J Renew Sustain Energy 12(5):052702

    Article  Google Scholar 

  • British Petroleum (BP) (2017). BP statistical review of world energy. Retrieved from http://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/downloads.html.

  • Chen W, Yalin L (2018) The impacts of renewable energy and technological innovation on environment-energy-growth nexus: New evidence from a panel quantile regression. Renew Energy 123:1–14

    Article  Google Scholar 

  • Cheng Y, Yao X (2021) Carbon intensity reduction assessment of renewable energy technology innovation in China: a panel data model with cross-section dependence and slope heterogeneity. Renew Sust Energ Rev 135:110157

    Article  Google Scholar 

  • Chudik A, Pesaran MH (2015) Common correlated effects estimation of heterogeneous dynamic panel data models with weakly exogenous regressors. J Econ 188(2):393–420

    Article  Google Scholar 

  • Ditzen J (2018) Estimating dynamic commom-correlated effects in stata. Stata J 18(30):585–617

    Article  Google Scholar 

  • Dogan E, Inglesi-lotz R (2020) The impact of economic structure to the environmental Kuznets curve (EKC) hypothesis: evidence from European countries. Environ Sci Pollut Res 27(3):12717–12724

    Article  Google Scholar 

  • Doğan B, Driha OM, Balsalobre Lorente D, Shahzad U (2021) The mitigating effects of economic complexity and renewable energy on carbon emissions in developed countries. Sustain Dev 29(1):1–12

    Article  Google Scholar 

  • Doni, F., Gasperini, A., & Soares, J. T. (2020). What is the SDG 13?. In SDG13–Climate Action: Combating Climate Change and its Impacts. Emerald Publishing Limited.

  • Dumitrescu E-L, Hurlin C (2012) Testing for Granger non-causality in heterogeneous panels. Econ Model 29(4):1450–1460

    Article  Google Scholar 

  • Eyuboglu S, Eyuboglu K (2020) Tourism development and economic growth: an asymmetric panel causality test. Curr Issue Tour 23(6):659–665

    Article  Google Scholar 

  • Ferreira C (2016) Debt and economic growth in the European Union: a panel Granger causality approach. Int Adv Econ Res 22:131–149

    Article  Google Scholar 

  • Franco IB, Power C, Whereat J (2020) SDG 7 affordable and clean energy, In Actioning the Global Goals for Local Impact (pp. 105-116). Springer, Singapore

    Book  Google Scholar 

  • Grossman GM, Krueger AB (1995) Economic growth and the environment. Q J Econ 110(2):353–377

    Article  Google Scholar 

  • Hao LN, Umar M, Khan Z, Ali W (2021) Green growth and low carbon emission in G7 countries: how critical the network of environmental taxes, renewable energy and human capital is? Sci Total Environ 752:141853

    Article  CAS  Google Scholar 

  • Hasanov FJ, Khan Z, Hussain M, Tufail M (2021) Theoretical framework for the carbon emissions effects of technological progress and renewable energy consumption. Sustain Dev

  • Hussain A, Dey S (2021) Revisiting environmental Kuznets curve with HDI: new evidence from cross-country panel data. J Environ Econ Policy:1–19

  • Iheonu CO, Anyanwu OC, Odo OK, Nathaniel SP (2021) Does economic growth, international trade, and urbanization uphold environmental sustainability in sub-Saharan Africa? Insights from quantile and causality procedures. Environ Sci Pollut Res 28(22):28222–28233

    Article  Google Scholar 

  • Inglesi-Lotz R, Dogan E (2018) The role of renewable versus non-renewable energy to the level of CO2 emissions a panel analysis of sub-Saharan Africa’s Βig 10 electricity generators. Renew Energy 123:36–43

    Article  Google Scholar 

  • Intergovernmental Panel on Climatic Change (2016) The 5th assessment report of the intergovernmental panel on climate change. Cambridge University Press, Cambridge

    Google Scholar 

  • Kalu EU, Nwafor UF, Okoyeuzu CR, Onodugo VA (2020) Dynamics of energy consumption, real sector value added and growth in energy deficient economies: panel analyses of SSA countries. Int J Energy Sect Manag 14(5):1001–1022

    Article  Google Scholar 

  • Katircioglu S, Celebi A (2018) Testing the role of external debt in environmental degradation: empirical evidence from Turkey. Environ Sci Pollut Res 25(9):8843–8852

    Article  Google Scholar 

  • Khan, Z., Murshed, M., Dong, K., & Yang, S. (2021). The roles of export diversification and composite country risks in carbon emissions abatement: evidence from the signatories of the Regional Comprehensive Economic Partnership agreement. Appl Econ, 1-19.

  • Kirikkaleli D, & Adebayo TS (2021). Do public-private partnerships in energy and renewable energy consumption matter for consumption-based carbon dioxide emissions in India?. Environ Sci Pollut Res, 1-14.

  • Koengkan M, Fuinhas JA, Santiago R (2020) The relationship between CO2 emissions, renewable and non-renewable energy consumption, economic growth, and urbanisation in the Southern Common Market. J Environ Econ Policy 9(4):383–401

    Article  Google Scholar 

  • Kumail T, Ali W, Sadiq F, Aburumman A (2020) Relationship between CO2 emissions, tourism receipt, energy use and international trade in Pakistan. Travel and Tourism Research Association: Advancing Tourism Research Globally 4:1–10

    Google Scholar 

  • Kuznets S (1955) Economic growth and income inequality. Am Econ Rev 45(1):1–28

    Google Scholar 

  • Law SH, Ng CH, Kutan AM, Law ZK (2021) Public debt and economic growth in developing countries: Nonlinearity and threshold analysis. Econ Model 98:26–40

    Article  Google Scholar 

  • Liu J, Murshed M, Chen F, Shahbaz M, Kirikkaleli D, Khan Z (2021) An empirical analysis of the household consumption-induced carbon emissions in China. Sustain Prod Consu 26:943–957

    Google Scholar 

  • Luni T, Majeed MT (2020) Improving environmental quality through renewable energy: evidence from South Asian economies. Int J Energy Water Resour 4:335–345

    Article  Google Scholar 

  • Ma Q, Murshed M, Khan Z (2021) The nexuses between energy investments, technological innovations, emission taxes, and carbon emissions in China. Energy Policy 155:112345

    Article  CAS  Google Scholar 

  • Makun K (2021) External debt and economic growth in Pacific Island countries: a linear and nonlinear analysis of Fiji Islands. J Econ Asymmetries 23:e00197

    Article  Google Scholar 

  • Mehmood U, Tariq S (2020) Globalisation and CO2 emissions nexus: evidence from the EKC hypothesis in South Asian countries. Environ Sci Pollut Res 27:37044–37055

    Article  CAS  Google Scholar 

  • Meo MS, Nathaniel SP, Khan MM, Nisar QA, Fatima T (2020a) Does temperature contribute to environment degradation? Pakistani Experience Based on Nonlinear Bounds Testing Approach. Glob Bus Rev 1:15

    Google Scholar 

  • Meo M, Nathaniel S, Shaikh G, & Kumar A (2020b) Energy consumption, institutional quality and tourist arrival in Pakistan: Is the nexus (a) symmetric amidst structural breaks?. J Public Aff, e2213.

  • Mohsin M, Kamran HW, Nawaz MA, Hussain MS, Dahri AS (2021) Assessing the impact of transition from nonrenewable to renewable energy consumption on economic growth-environmental nexus from developing Asian economies. J Environ Manag 284(2021):111999

    Article  Google Scholar 

  • Murshed M (2020) Are trade liberalization policies aligned with renewable energy transition in low and middle income countries? An Instrumental Variable approach. Renew Energy 151:1110–1123

    Article  Google Scholar 

  • Murshed M (2021a) Can regional trade integration facilitate renewable energy transition to ensure energy sustainability in South Asia? Energy Rep 7:808–821

    Article  Google Scholar 

  • Murshed M (2021b) LPG consumption and environmental Kuznets curve hypothesis in South Asia: a time-series ARDL analysis with multiple structural breaks. Environ Sci Pollut Res 28(7):8337–8372

    Article  Google Scholar 

  • Murshed M, Ali SR, Haseeb M, Nathaniel SP (2021) Modelling the public moral hazard problem of international remittance inflows in Bangladesh. Int J Sustain Econ 13(2):166–196

  • Nathaniel SP (2020a) Ecological footprint, energy use, trade, and urbanisation linkage in Indonesia. Geojournal:1–4

  • Nathaniel SP (2020b) Biocapacity, human capital, and ecological footprint in G7 countries: the moderating role of urbanization and necessary lessons for emerging economies. Energy Ecol Environ:1–16

  • Nathaniel SP (2021a) Environmental degradation in ASEAN: assessing the criticality of natural resources abundance, economic growth and human capital. Environ Sci Pollut Res:1–13

  • Nathaniel S (2021b) Natural resource abundance and broad-based financial development nexus in ASEAN countries: accounting for globalization and human capital. Eur J Govern Econ 10(1):30–45

    Article  Google Scholar 

  • Nathaniel S, Anyanwu O, Shah M (2020) Renewable energy, urbanisation, and ecological footprint in the Middle East and North Africa region. Environ Sci Pollut Res 27:14601–14613

    Article  Google Scholar 

  • Nathaniel S, Barua S, Hussain H, Adeleye N (2021a) The determinants and interrelationship of carbon emissions and economic growth in African economies: fresh insights from static and dynamic models. J Public Aff 21(1):e2141

    Article  Google Scholar 

  • Nathaniel SP, Barua S, & Ahmed Z (2021b). What drives ecological footprint in top ten tourist destinations? Evidence from advanced panel techniques. Environ Sci Pollut Res, 1-10.

  • Nathaniel SP, Alam MS, Murshed M, Mahmood H, Ahmad P (2021c) The roles of nuclear energy, renewable energy, and economic growth in the abatement of carbon dioxide emissions in the G7 countries. Environ Sci Pollut Res:1–16

  • Nathaniel SP, Yalçiner K, Bekun FV (2021d) Assessing the environmental sustainability corridor: linking natural resources, renewable energy, human capital, and ecological footprint in BRICS. Res Policy 70:101924

    Article  Google Scholar 

  • Nathaniel SP, Bekun F, Faizulayev A (2021e) Modelling the impact of energy consumption, natural resources, and urbanization on ecological footprint in South Africa: assessing the moderating role of human capital. Int J Energy Econ Policy 11(3):130–139

    Article  Google Scholar 

  • Nathaniel SP, Murshed M, Bassim M (2021f) The nexus between economic growth, energy use, international trade and ecological footprints: the role of environmental regulations in N11 countries. Energ Ecol Environ pp 1–17. https://doi.org/10.1007/s40974-020-00205-y

  • Omojolaibi, J., & Nathaniel, S. (2020). Assessing the potency of environmental regulation in maintaining environmental sustainability in MENA countries: an advanced panel data estimation. J Public Aff, e2526

  • Pata UK, Caglar AE (2021) Investigating the EKC hypothesis with renewable energy consumption, human capital, globalization and trade openness for China: Evidence from augmented ARDL approach with a structural break. Energy 216:119220

    Article  Google Scholar 

  • Pesaran MH (2015) Testing weak cross-sectional dependence in large panels. Aust Econ Rev 34:1089–1117

    Article  Google Scholar 

  • Qin L, Raheem S, Murshed M, Miao X, Khan Z, & Kirikkaleli D (2021) Does financial inclusion limit carbon dioxide emissions? Analyzing the role of globalization and renewable electricity output. Sustain Dev

  • Radmehr R, Henneberry SR, Shayanmehr S (2021) Renewable energy consumption, CO2 emissions, and economic growth nexus: a simultaneity spatial modeling analysis of EU countries. Struct Chang Econ Dyn 57:13–27

    Article  Google Scholar 

  • Rahman A, Murad SMW, Ahmad F, Wang X (2020) Evaluating the EKC hypothesis for the BCIM-EC member countries under the belt and road initiative. Sustainability 12:1–20

    Article  Google Scholar 

  • Rodgers MD (2021) Pathways to eliminate carbon emissions via renewable energy investments at higher education institutions. Electr J 34(5):106952

    Article  Google Scholar 

  • Shkolnyk I, Koilo V (2018) The relationship between external debt and economic growth: empirical evidence from Ukraine and other emerging economies. Investment Manag Financial Innov 15:387–400

    Article  Google Scholar 

  • Siddique A, Selvanathan EA, & Selvanathan S (2015) The impact of external debt on economic growth: empirical evidence from highly indebted poor countries (economics discussion / Working Papers No. 15-10). The University of Western Australia, Department of Economics. Retrieved from https://ideas.repec.org/p/uwa/wpaper/15-10.html

  • Solarin SA, Nathaniel SP, Bekun FV, Okunola AM, Alhassan A (2021) Towards achieving environmental sustainability: environmental quality versus economic growth in a developing economy on ecological footprint via dynamic simulations of ARDL. Environ Sci Pollut Res 28(14):17942–17959

    Article  Google Scholar 

  • Song Z (2021) Economic growth and carbon emissions: estimation of a panel threshold model for the transition process in China. J Clean Prod 278:123773

    Article  CAS  Google Scholar 

  • Sun X, Liu X (2020) Decomposition analysis of debt’s impact on China’s energy consumption. Energy Policy 146:1–12

    Article  CAS  Google Scholar 

  • Tahir T, Luni T, Majeed MT, Zafar A (2021) The impact of financial development and globalization on environmental quality: evidence from South Asian economies. Environ Sci Pollut Res 28(7):8088–8101

    Article  Google Scholar 

  • Tariq UM (2020) Global and CO2 emissions nexus: evidence from the EKC hypothesis in South Asian countries. Environ Sci Pollut Res 27(29):37044–37056

    Article  Google Scholar 

  • Tong T, Ortiz J, Xu C, Li F (2020) Economic growth, energy consumption, and carbon dioxide emissions in the E7 countries: a bootstrap ARDL bound test. Energy Sustain Soc 10:1–17

    Google Scholar 

  • Tran QT (2021). Economic policy uncertainty and cost of debt financing: international evidence. North Am J Econ Finance, 101419.

  • Ullah S, Apergis N, Usman A, Chishti MZ (2020) Asymmetric effects of inflation instability and GDP growth volatility on environmental quality in Pakistan. Environ Sci Pollut Res Int 27(25):31892–31904

    Article  CAS  Google Scholar 

  • Vásquez LA (2020) If you don’t owe, you don’t own: debt, discipline and growth in rural Colombia. J Rural Stud 78:271–281

    Article  Google Scholar 

  • Wang Q, Zhang F (2021) The effects of trade openness on decoupling carbon emissions from economic growth–evidence from 182 countries. J Clean Prod 279:123838

    Article  CAS  Google Scholar 

  • Wang Z, Jebli MB, Madaleno M, Doğan B, Shahzad U (2021) Does export product quality and renewable energy induce carbon dioxide emissions: evidence from leading complex and renewable energy economies. Renew Energy 171:360–370

    Article  CAS  Google Scholar 

  • Westerlund J (2007) Testing for error correction in panel data. Oxf Bull Econ Stat 69(6):709–748

    Article  Google Scholar 

  • World Bank. (2020). World development indicators. Retrieved from https://data.worldbank.org/data-catalog/world-development-indicators.

  • World Development Indicator (2020) World Bank Development Indicators database (online) available at https://data.worldbank.org/. Accessed 24 Feb 2020

  • Zhang M, Yang Z, Liu L, Zhou D (2021) Impact of renewable energy investment on carbon emissions in China-an empirical study using a nonparametric additive regression model. Sci Total Environ 147109

Download references

Acknowledgements

The author is grateful to the editor and the anonymous reviewers for their valuable comments that substantially improved this manuscript.

Author information

Authors and Affiliations

  1. Faculty of Social Sciences, Department of Economics, University of Lagos, Akoka, Nigeria

    Darlington Akam, Oluwasegun Owolabi & Solomon Prince Nathaniel

  2. School of Foundation, Lagos State University, Badagry, Nigeria

    Solomon Prince Nathaniel

Authors
  1. Darlington Akam
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Oluwasegun Owolabi
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Solomon Prince Nathaniel
    View author publications

    You can also search for this author in PubMed Google Scholar

Contributions

DA conceived the idea and performed data analysis. OO wrote the introduction and methodology. SPN reviewed the literature, discussed the results, and supervised the study.

Corresponding author

Correspondence to Solomon Prince Nathaniel.

Ethics declarations

Ethics approval and consent to participate

Not applicable.

Consent to publish

Not applicable.

Consent for publication

Not applicable.

Conflict of interest

The authors declare no conflict of interest.

Additional information

Responsible Editor: Nicholas Apergis

Publisher’s note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Appendix

Appendix

Table 10 List of HIPC economies
Full size table

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Akam, D., Owolabi, O. & Nathaniel, S.P. Linking external debt and renewable energy to environmental sustainability in heavily indebted poor countries: new insights from advanced panel estimators. Environ Sci Pollut Res 28, 65300–65312 (2021). https://doi.org/10.1007/s11356-021-15191-9

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11356-021-15191-9

Keywords

Search

Navigation