The effects of non-renewable energy, renewable energy, economic growth, and foreign direct investment on the sustainability of African countries

This study explores the dynamic effect of non-renewable energy, renewable energy, economic growth, and foreign direct investment on environmental degradation in twenty selected African countries over the period 2000–2015. We have adopted Environmental Kuznets Curve hypothesis and the Pollution Haven/Halo hypothesis simultaneously. In the first stage, this paper performs cross-independence test and found cross-sectional dependence in carbon emissions, non-renewable energy, and renewable energy. In the second stage, it applies first generation and second generation unit root tests for panel data and found that all concerning variables are I(1) except for economic growth which is found I(0). Therefore, we used the Panel Autoregressive Distributed Lag approach using Pooled Mean Group, Mean Group, and Dynamic Fixed Effect estimators. The results indicate that all independent variables are significant and positive to CO2 emissions except for renewable energy found significant and negative to CO2 emissions, and foreign direct investment found significant and positive only in the long term. Moreover, the Environmental Kuznets Curve hypothesis did not hold in our sample, while we found strong evidence for the Pollution Haven hypothesis in selected African countries.