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Promoting renewable energy consumption in Sub-Saharan Africa: how capital flight crowds out the favorable effect of foreign aid

Author

Listed:
  • Simplice A. Asongu

    (Johannesburg, South Africa)

  • Joel Hinaunye Eita

    (Johannesburg, South Africa)

Abstract

The study assesses the effect of capital flight in the nexus between foreign aid and renewable energy consumption in 20 countries in Sub-Saharan Africa using data for the period 1996-2018. The empirical technique employed is interactive quantile regressions and the following findings are established. Foreign aid increases renewable energy consumption while capital flight dampens the favorable effect of foreign aid on renewable energy consumption. The underlying significance and corresponding mitigating effect are exclusively relevant to the bottom (i.e., 10th) quantile of the conditional distribution of renewable energy consumption. The findings are robust to simultaneity and the unobserved heterogeneity. Policy implications are discussed.

Suggested Citation

  • Simplice A. Asongu & Joel Hinaunye Eita, 2023. "Promoting renewable energy consumption in Sub-Saharan Africa: how capital flight crowds out the favorable effect of foreign aid," Journal of Africa SEER Centre(ASC) 23/012, Africa SEER Centre(ASC).
    • Handle: RePEc:dbm:wpaper:23/012
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    File URL: https://africaseercentre.org/publications/RePEc/dbm/dbm-wpaper/Promoting-Renewable-Energy-Consumption-in-Sub-Saharan-Africa-How-Capital-Flight-Crowds-out-the-Favorable-Effect-of-Foreign-Aid.pdf
    File Function: Revised version, 2023
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    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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