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Does foreign direct investment asymmetrically influence carbon emissions in sub-Saharan Africa? Evidence from nonlinear panel ARDL approach

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Abstract

In recent decades, the relationship between foreign direct investment (FDI) and carbon emissions has garnered the extensive attention by researchers and governments across the globe. Also, for most part, empirical studies on this nexus have assumed a symmetric relationship through the imposition of linear specifications. However, such relationships do not account for asymmetries in the impact of FDI on carbon emissions. In the case of sub-Saharan Africa, such relationships are crucial and need more careful analysis given the important role FDI plays in the development of the sub-region. Thus, this paper examines the asymmetric effect of FDI on carbon emissions in 41 selected sub-Saharan African countries spanning from 1996 to 2018. In order to decompose FDI into positive and negative partial sum and examine possible asymmetric effects of the variables on carbon emissions, we used the panel nonlinear autoregressive distributed lag (NARDL) approach. This method accounts for cross-sectional variances. Our results show that in the long run, a positive shock in FDI increases carbon emissions while a negative shock lowers them. Our results also show that carbon emissions respond asymmetrically to changes in FDI. It is recommended that comprehensive investment policies aimed at encouraging clean technology and environmentally friendly investments be implemented to ensure environmental sustainability.

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Author notes

  1. John Kwaku Amoh

    Present address: Department of Accounting, University of Professional Studies, Accra, Ghana

Authors and Affiliations

  1. Department of Banking and Finance, University of Professional Studies, Accra, Ghana

    Abdallah Abdul-Mumuni & Barbara Deladem Mensah

Authors
  1. Abdallah Abdul-Mumuni
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  2. John Kwaku Amoh
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Contributions

Abdallah Abdul-Mumuni contributed to the study conception, data collection, estimations, and analysis. John Kwaku Amoh wrote the introduction section of the manuscript, while Barbara Deladem Mensah reviewed related literature on foreign direct investment-carbon emissions nexus. All authors commented on previous versions of the manuscript and all authors read and approved the final manuscript.

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Correspondence to Abdallah Abdul-Mumuni.

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Appendix 1 List of countries

Appendix 1 List of countries

Benin

Kenya

Sierra Leone

Burundi

Burkina Faso

Madagascar

Seychelles

Central Africa Rep

Botswana

Mali

Togo

Congo DR

Cote d’Ivoire

Mozambique

Tanzania

Comoros

Cameroon

Mauritius

Uganda

Mauritania

Congo, Republic

Namibia

South Africa

Equatorial Guinea

Cabo Verde

Niger

Malawi

Chad

Gabon

Nigeria

Ethiopia

Zambia

Ghana

Rwanda

Lesotho

 

Guinea-Bissau

Sudan

Guinea

 

The Gambia

Senegal

Angola

 

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Abdul-Mumuni, A., Amoh, J.K. & Mensah, B.D. Does foreign direct investment asymmetrically influence carbon emissions in sub-Saharan Africa? Evidence from nonlinear panel ARDL approach. Environ Sci Pollut Res 30, 11861–11872 (2023). https://doi.org/10.1007/s11356-022-22909-w

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