ADSU International Journal of Applied Economics, Finance and Management

Trade-Off Between Economic Growth And Environmental Sustainability In Africa

Abstract

This study investigated the relationship between economic growth and environmental sustainability in African countries, utilizing data for 30 African nations from 2000 to 2022. The validity of the Environmental Kuznets Curve hypothesis was tested for Africa to explore the relationship between economic activities and environmental quality, focusing on carbon dioxide emissions as a key indicator. The analysis used a panel regression model, incorporating variables such as Gross Domestic Product growth rate, population growth, foreign direct investment, trade openness, and exchange rate. Descriptive statistics, pairwise correlation, and diagnostic tests were conducted to ensure the robustness of the results. The findings revealed that trade openness significantly reduce CO2 emissions, suggesting that increased integration into the global economy facilitates the adoption of cleaner technologies and more efficient production processes. Conversely, GDP growth, population growth, and FDI were statistically insignificant. The study underscores the importance of aligning trade policies with environmental objectives to promote sustainable development. It recommends that policymakers enhance trade agreements with environmental provisions, attract green investments, and manage population growth through sustainable urban planning and resource management. The research contributes to the existing literature by highlighting the role of trade openness in achieving environmental goals in Africa, These insights are crucial for policymakers aiming to balance economic development with environmental preservation, ensuring long-term sustainability and prosperity for the African continent.