Environmental sustainability and economic development in sub-Saharan Africa: A modified EKC hypothesis

Despite numerous studies of the Environmental Kuznets Curve (EKC), the evidence is still inconclusive and little has been done to capture the issue of environmental sustainability and welfare aspects of growth in the EKC relationship. Accordingly, this paper aims to investigate the environment-development linkage under a sustainability-oriented EKC framework in 20 sub-Saharan African (SSA) countries for the period from 1990 to 2015. The Common Correlated Effects version of Pooled Mean Group Estimator (CCE-PMG) in the context of error-correction based panel Autoregressive Distributed Lag (ARDL) model augmented with cross-sectional averages was employed as a preferred estimation technique. The study also used an appropriate U test to check the presence of genuine inverted U-shaped EKC relationship. The results confirm the existence of a modified EKC hypothesis in SSA, but the linkage depends on the extent of endowment of natural resources. Among the growth-related factors, energy consumption and trade openness are found to have a long run detrimental effect on the environment. The study suggests that country's effort for economic development needs to be accompanied by appropriate policy options to ensure environmental sustainability.