Abstract
This study examines the spatial impact of FDI on ecological footprint of 31 African countries. In achieving this, the study uses the Driscoll-Kraay (1998) random effect model, fixed-effect instrumental variable regression, and the spatial Durbin model. There are three main important findings from this empirical study. First, FDI has a nonlinear impact on ecological footprint in Africa. At the initial stage, FDI reduces ecological footprint up to a threshold of $404.75–$669.96 million, before the impact increases ecological degradation. This result is robust to the instrumental regression model. Second, the results further reveal a significant spatial spillover of FDI on ecological footprint in Africa. Third, the empirical results provide evidence of both direct and spillover effects of environmental degradation determinant in Africa. This denotes that environmental quality of a particular country influences the environmental quality of other neighbouring countries. While it is important to attract significant amount of foreign investment to Africa, this study recommends that African governments need to improve their environmental regulations and laws to achieve transfer of energy-saving technology from foreign investors.
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Data availability
The datasets used and/or analysed during the current study are available from the corresponding author on reasonable request.
Notes
Quadrant A in Fig. 3 are countries with negative spatial clustering of low ecological footprint, while B indicates countries with positive spatial clustering of high ecological footprint, C indicates positive spatial cluster of countries with low ecological footprint, and D is negative spatial cluster of high ecological footprint.
The selected countries account for 91% of total stock of FDI inflows in Africa in 2017. This makes our sample more representative.
The fixed-effect instrumental regression is used to address endogeneity in the model. Lagged FDI was used as instruments in the model.
This study empirically confirms the presence of spatial autocorrelation in Eq. (2) with the Moran \(Ii\) test. This is done through the residual of the pooled regression (not reported in this study but available on request).
See Elhorst (2014) for more on the mathematical derivation.
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Sodiq Arogundade conceptualized the major idea of this research paper. He prepared the methodology, data collection, analysis, interpretation, and conclusion section. Adewale Hassan prepared the introduction, and Biyase Mduduzi prepared the literature review. The three authors have read and approved the final version of this manuscript.
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Arogundade, S., Mduduzi, B. & Hassan, A.S. Spatial impact of foreign direct investment on ecological footprint in Africa. Environ Sci Pollut Res 29, 51589–51608 (2022). https://doi.org/10.1007/s11356-022-18831-w
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DOI: https://doi.org/10.1007/s11356-022-18831-w