Sustainable Energy Usage for Africa: The Role of Foreign Direct Investment in Green Growth Practices to Mitigate CO2 Emissions

Author:

Kouassi Verena Dominique1,Xu Hongyi1,Bosah Chukwunonso Philip2,Ayimadu Twum Edwin3,Nadege Mbula Ngoy4

Affiliation:

1. School of Management, Wuhan University of Technology, Wuhan 430070, China

2. School of Public Administration, China University of Geosciences, Wuhan 430074, China

3. School of Resource and Environmental Science, Wuhan University, No. 299, Luoyu Road, Wuhan 430072, China

4. Department of Exploration and Production, Faculty of Oil, Gas and Renewable Energies, University of Kinshasa, Kinshasa XI B.P.127, Democratic Republic of the Congo

Abstract

In line with Africa’s commitment to keeping up with the United Nations Framework Convention on Climate Change, achieving a sustainable future requires balancing economic growth with environmental sustainability. This study investigates the long-term impacts of foreign direct investment, economic growth, agricultural production, and energy consumption on CO2 emissions across 43 African nations from 1990 to 2021. Despite significant research on the individual effects of these factors, the combined influence on CO2 emissions remains underexplored. Addressing this gap, this study employs cross-sectional augmented distributed lag estimators (CS-DL and AMG) and updated estimation packages to effectively examine the relationships between variables. Our findings are as follows: firstly, economic growth and energy use was shown to have a significant positive influence on CO2 in the long term. Also, foreign direct investment significantly promotes CO2 emissions. Secondly, the causality test shows a unidirectional causal relationship between CO2 emissions and foreign direct investment. The test also revealed a bidirectional relationship between GDP and CO2 emissions, as well as between energy consumption and CO2 emissions. Again, a bidirectional causation was observed between agricultural production and CO2 emissions. Thirdly, the impulse response analysis shows that GDP will contribute more to emissions over the 10-year forecast period. This study also proposes policy implications to lessen CO2 across the continent and advocates for the judicious adoption of existing policy frameworks like the 2030 Agenda for environmental Sustainability.

Funder

National Natural Science Foundation of China

Publisher

MDPI AG

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