Investigating the pollution haven hypothesis in oil and non-oil sub-Saharan Africa countries: Evidence from quantile regression technique

Abstract

The deepening of global trade flows and world interconnectedness has its implications on several macroeconomic indices that stretches, to say the least environmental consequences. To this end, this study explores the dynamic interaction between energy consumption (renewable and non-renewable), foreign direct investment, carbon dioxide emission, real income and urbanization for both oil and non-oil countries for annual period from 1990 to 2016 in a carbon-income framework. To examine the nature of relationship between the outlined variables, we rely on a balanced panel econometrics analysis alongside panel quantile regression. Empirical analysis affirms the pollution haven hypothesis for both oil and non-oil countries under consideration. This suggests that foreign direct investment inflow has a detrimental effect on the host country. This is instructive to stakeholders and government officials. Further empirical results show that conventional energy from (fossil-fuel), urban population dampens environmental quality in the examined regions. However, renewable energy shows strong strength to improve environmental quality. This implies that renewables energy serves as a panacea to environmental sustainability target in both oil and non-oil dependent countries. Finally, these outcomes suggest the need to pursue low-carbon strategies for a cleaner and friendly environment.