Does industrialization promote the emission mitigation agenda of East Africa? a pathway toward environmental sustainability

Abstract

Africa’s economy continues to be characterized by increasing environmental pollution caused by anthropogenic activities. Despite the implications of environmental pollution in the continent, little attention has been paid to it, although almost all its countries are signatories to the Paris Agreement. One macroeconomic variable that has proven to be a major driver of environmental pollution in the region is industrialization. However, despite the numerous explorations on the connection between industrialization and environmental degradation, limited studies have examined the linkage amidst the series in East Africa. This study was, therefore, conducted to help fill that gap. In accomplishing this goal, econometric techniques that control cross-sectional correlations, heterogeneity, and endogeneity, among others, were employed for the analysis. From the results, the panel under consideration was heterogeneous and cross sectionally correlated. In addition, the studied series were first differenced stationary and co-integrated in the long run. The elasticities of the regressors were explored via the cross sectionally augmented autoregressive distributed lag (CS-ARDL) estimator, the cross sectionally augmented distributed lag (CS-DL) estimator, and the augmented mean group (AMG) estimator. According to the results, industrialization led to a reduction in the environmental quality in the region through high CO2 emissions. In addition, financial development, foreign direct investments, urbanization, and energy consumption were not environmentally friendly in the bloc. On the causal linkages amid the series, bidirectional causalities between industrialization and CO2 emissions, energy consumption and CO2 emissions, and foreign direct investments and CO2 emissions were detected. Finally, one-way causal movements from financial development and urbanization to CO2 emissions were unraveled. These findings are useful in helping stimulate the emission mitigation agenda of the region. Based on the findings, the study recommended, among others, that national policies that can promote energy conservation at the industrial level and can convert the industrial structure of the region to a low carbon-intensive one should be formulated.