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The Effect of Foreign Direct Investment Inflows and Energy Consumption on Environmental Pollution in Sub-Saharan Africa

Author

Listed:
  • Winnie Thebuho
  • Lee-Ann Steenkamp
  • Pieter Opperman

    (Stellenbosch Business School, University of Stellenbosch, South Africa)

Abstract

The interplay between FDI inflows, energy consumption and environmental pollution stems from the pollution haven hypothesis (PHH). These relationships were examined by analysing panel data for 21 sub-Saharan African (SSA) countries from 1990- 2016. More FDI inflows were found to worsen environmental pollution. However, when linked with relative income, more FDI inflows tended to lessen environmental pollution. Consequently, the existence of the PHH could not be unequivocally confirmed in SSA. The level of economic growth was also examined to assess the impact on environmental pollution. The validity of the Environmental Kuznets Curve (EKC) hypothesis was confirmed with an N-type relationship.

Suggested Citation

  • Winnie Thebuho & Lee-Ann Steenkamp & Pieter Opperman, 2024. "The Effect of Foreign Direct Investment Inflows and Energy Consumption on Environmental Pollution in Sub-Saharan Africa," Review of Development Finance Journal, Chartered Institute of Development Finance, vol. 14(1), pages 57-71.
    • Handle: RePEc:afj:journ3:v:14:y:2024:i:1:p:57-71
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    File URL: https://journals.co.za/doi/abs/10.10520/ejc-rdfin_v14_n1_a5
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    More about this item

    Keywords

    Environmental kuznets curve; FDI; Pollution haven hypothesis; Sub-Saharan Africa;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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