Environmental performance in the West African economy: MM-quantile and 2SLS approach

Hammed Musibau (), Maria Yanotti (), Joaquin Vespignani and Rabindra Nepal
Additional contact information
Hammed Musibau: Tasmanian School of Business & Economics, University of Tasmania, http://www.utas.edu.au/business-and-economics
Maria Yanotti: Tasmanian School of Business & Economics, University of Tasmania, https://www.utas.edu.au/profiles/staff/economics/maria-yanotti

No 2021-05, Working Papers from University of Tasmania, Tasmanian School of Business and Economics

Abstract: The 2019 World Bank report on West Africa's coast indicates that over $3.8 billion is lost annually due to environmental issues, like erosion, flooding, and pollution. In this paper, the newly introduced environmental performance index (EPI) is incorporate into the neoclassical growth model to empirically address the impact of environmental performance on economic growth for the Economic Community of West African States (ECOWAS). Using the novel Method of Moments-Quantile Regression methodology and 2SLS models, the empirical investigation finds a positive relationship between environmental performance and economic growth across quantiles for ECOWAS. Empirical results provide evidence supporting bidirectional relationship running from environmental performance to economic growth; from government size to economic growth; and from trade openness to economic growth across all quantiles. Results show that environmental performance, government size, labour, and capital stock have a positive impact on West African Economic Growth, while trade openness decreases economic growth. We find a 48% optimal threshold of environmental performance index (EPI) on economic Growth for ECOWAS countries. Based on the findings, policies to encourage improved environmental performance above the threshold estimated will go a long way to enhance West African economies.

Keywords: economic growth; environmental performance; ECOWAS; Moment of Method-QR estimator (search for similar items in EconPapers)
JEL-codes: C31 F43 F64 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2021
New Economics Papers: this item is included in nep-afr, nep-env and nep-gro
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Published by the University of Tasmania. Discussion paper 2021-05

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Working Paper: Environmental Performance in the West African Economy: MM-Quantile and 2SLS Approach (2021)
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