Diaspora Income, Financial Development and Ecological footprint in Africa

Sodiq Arogundade, Adewale Hassan and Santos Bila

MPRA Paper from University Library of Munich, Germany

Abstract: This study examines the impact of diaspora income on the ecological footprint of 22 countries African countries. Methodologically, we used the Driscoll-Kraay (1998) fixed-effect model, fixed effect instrumental variable regression, Machado and Silva (2019) panel quantile regression, and Dumitrescu and Hurlin (2012) causality test. There are four main important findings from this empirical study: (1) diaspora income has a negative and statistical impact on ecological degradation, (2) financial development plays a crucial role in mitigating the environmental impact of diaspora income, and African countries must achieve an annual estimated threshold of financial development before they could reap the environmental quality impact of diaspora income, (3) the role of financial development in reducing the environmental degradation impact of diaspora income is less for higher polluting countries in Africa, (4) unidirectional causality from diaspora income to ecological footprint. In ensuring a sustainable environment, we recommend that African governments provide a tax credit to the recipient of the diaspora income who invests in environment-friendly technologies.

Keywords: Diaspora income; Driscoll-Kraay fixed-effect model; fixed effect instrumental variable regression; Machado and Silva (2019) MMQR; Dumitrescu and Hurlin (2012) causality test; Financial development; Ecological footprint; Africa (search for similar items in EconPapers)
JEL-codes: F64 Q5 Q56 (search for similar items in EconPapers)
Date: 2021-11-25
New Economics Papers: this item is included in nep-afr, nep-ene, nep-env and nep-fdg
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Citations: View citations in EconPapers (1)

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