Sustainable Energy Usage for Africa: The Role of Foreign Direct Investment in Green Growth Practices to Mitigate CO 2 Emissions

Verena Dominique Kouassi (), Hongyi Xu, Chukwunonso Philip Bosah, Twum Edwin Ayimadu and Mbula Ngoy Nadege
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Verena Dominique Kouassi: School of Management, Wuhan University of Technology, Wuhan 430070, China
Hongyi Xu: School of Management, Wuhan University of Technology, Wuhan 430070, China
Chukwunonso Philip Bosah: School of Public Administration, China University of Geosciences, Wuhan 430074, China
Twum Edwin Ayimadu: School of Resource and Environmental Science, Wuhan University, No. 299, Luoyu Road, Wuhan 430072, China
Mbula Ngoy Nadege: Department of Exploration and Production, Faculty of Oil, Gas and Renewable Energies, University of Kinshasa, Kinshasa XI B.P.127, Democratic Republic of the Congo

Energies, 2024, vol. 17, issue 15, 1-23

Abstract: In line with Africa’s commitment to keeping up with the United Nations Framework Convention on Climate Change, achieving a sustainable future requires balancing economic growth with environmental sustainability. This study investigates the long-term impacts of foreign direct investment, economic growth, agricultural production, and energy consumption on CO 2 emissions across 43 African nations from 1990 to 2021. Despite significant research on the individual effects of these factors, the combined influence on CO 2 emissions remains underexplored. Addressing this gap, this study employs cross-sectional augmented distributed lag estimators (CS-DL and AMG) and updated estimation packages to effectively examine the relationships between variables. Our findings are as follows: firstly, economic growth and energy use was shown to have a significant positive influence on CO 2 in the long term. Also, foreign direct investment significantly promotes CO 2 emissions. Secondly, the causality test shows a unidirectional causal relationship between CO 2 emissions and foreign direct investment. The test also revealed a bidirectional relationship between GDP and CO 2 emissions, as well as between energy consumption and CO 2 emissions. Again, a bidirectional causation was observed between agricultural production and CO 2 emissions. Thirdly, the impulse response analysis shows that GDP will contribute more to emissions over the 10-year forecast period. This study also proposes policy implications to lessen CO 2 across the continent and advocates for the judicious adoption of existing policy frameworks like the 2030 Agenda for environmental Sustainability.

Keywords: foreign direct investment; agricultural production; economic growth; energy consumption; CO 2 emissions (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2024
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