Economic Growth and Environmental Sustainability: Empirical Evidence from Selected African Countries

Abstract

Environmental deterioration, driven by human activities, poses a critical global challenge. Its far-reaching consequences are a threat to the planet and future generations. Economic growth brought about by rapid industrialisation, increased economic activities, and globalisation has not only improved gross domestic product (GDP) and material well-being globally but consequently increased the emission of greenhouse gases, which in no doubt has far-reaching catastrophic impacts on society in the short-term and long term. Climate change, deforestation, pollution, natural resource depletion, food shortage and biodiversity loss are interconnected problems of environmental deterioration. Climate change harms ecosystems and food security, increases global inequality, and brings about more frequent and severe weather events – deforestation results in habitat loss - destabilising ecosystems and reducing biodiversity. Pollution from industries, agricultural activities, and urban sources endanger ecosystems and harm human health. Like never before, harmonising the concepts of people (society), profit (economy) and the planet (environment) to achieve a sustainable solution has been more crucial. For this reason, this study examines the impact of economic growth on environmental sustainability – empirically examining 15 randomly selected African countries. The Fixed Effect (FEM) method regression model was employed for the panel data. The analysis revealed that the coefficient of GDP growth rate is positive and statistically significant. However, the GDP growth rate squared is negative and statistically significant. These coefficients suggest that economic growth contributes positively and significantly to environmental degradation through the emission of greenhouse gases but substantially declines as the economy grows further. Thus, these coefficients show that we have an inverted U-curve, which supports the Environmental Kuznets Curve (EKC) Hypothesis. Agricultural value-added (AVA), manufacturing value-added (MVA) and foreign direct investment (FDI) have negative and significant impacts on greenhouse gas emissions, hence promoting environmental sustainability. In contrast, trade openness had a positive but insignificant impact on greenhouse gas emissions. The study urges policymakers across Africa to be benevolent in crafting economic policies, considering the environmental and social effects to protect people's well-being today and in future generations. Appropriate sensitisation and policy initiatives such as taxes and subsidies should be effectively employed to reduce greenhouse gas emissions to the barest minimum while also promoting eco-investing and eco-friendly initiatives.

Keywords

• environmental sustainability
• economic development
• greenhouse gaseous emissions
• environmental kuznets curve