The Environmental Impact of Industrialisation, Productive Capacity, and Governance in the East Africa Community

This study examines the impact of industrialisation, productive capacity index, and governance on CO2 emissions in East Africa from 2002 to 2018. A dataset of five countries—Kenya, Uganda, Tanzania, Burundi, and Rwanda—and Pooled Mean Group Autoregressive Distributed Lag (PMG-ARDL) was used for analysis. Results reveal that, in the long run, industry value added, governance, trade, and population density positively and significantly affected carbon emissions (CO2) per capita. However, the productive capacity index negatively significantly affected carbon emissions per capita. In the short run, the productive capacity index negatively and significantly affected carbon emissions. Variations by country in the short run are observed where industry value added, productive capacity index, governance, and trade significantly negatively affected carbon emissions in Uganda. However, population density in Kenya, Tanzania, Uganda, and Burundi significantly increased carbon emissions in the short run. Only industrialisation had a significant positive effect on carbon emissions in Rwanda. The results imply that industrialisation harms the environment, leading to higher carbon emissions and that poor governance increases the strain on the environment. Moreover, long-run estimation confirms that productive capacity has a significant role in increasing environmental quality. Therefore, emphasis on improving industrialisation across countries should also align with enhancing their governance indicators to strengthen the implementation of policies governing environmental concerns. Thus, policymakers should have an appropriate mix between industrial growth and emission reduction strategies.