Does foreign capital flow into ‘greener pastures’? Exploring the potential of FDI in mitigating carbon emissions in African states

Figures & data

Table 1. Summary of Africa-related studies.

Author	Scope	Methods	Results
Panel A: international panel studies (24)
Talukar and Meisner (1991)	44 developing countries: 1987–1995	GMM	−ve
Grimes and Kento (2003)	66 countries: 1980–1996	POLS	+ve
Hoffman et al. (2005)	112 countries: unbalanced panel 1990–2000	Panel causality tests	FDI→CO2 in middle-income countries CO2→FDI in low-income countries No causality in high-income countries
Chakraborty and Mukherjee (2013)	181 countries: 1980–2009	FGLS	+ve
Omri, Nguyen, and Rault (2014)	54 counties: 1990–2011	GMM	+ve for full sample Insig for Europe and Asia +ve for Latin America and Africa
Chang (2015)	65 countries	3 regime PTAR with corruption, rule of law and political stability thresholds	+ve at low regime Insig at middle regime −ve at high regime
Neequaye and Oladi (2015)	27 developing countries	POLS	+ve
Shahbaz et al. (2015)	99 countries	FMOLS	−ve for full and high-income countries +ve for middle and low-income countries
Doytch and Uctum (2016)	132 countries: 1984–2011	GMM	+ve effect for full sample and low-income countries Insig for middle and high-income countries
Shao (2017)	188 countries	GMM	−ve for full sample, HIC, MIC and LIC
Kastratovic (2019)	63 developing countries: 2000–2014	GMM	+ve
Sarokdie and Strezov (2019)	BRICS	Driscoll-Kraay regressions and panel quantile regressions	N-shaped relationship at all quantiles
Essandoh, Islam, and Kakanika (2020)	52 countries: 1991–2014	PMG-ARDL	Confirmed PHH
Marques and Caetano (2020)	21 high- and middle-income countries: 2001–2017	ARDL	−ve effect in HIC and + ve effect in MIC
Xie, Wang, and Cong (2020)	E11 countries; 2005–2014	PSTR	V- and W-shaped relationship
Adeel-Farooq, Riaz, and Ali (2021)	76 countries: 2002–2012	PMG	−ve (insig) for LI and MI (HI) for FDI from developing countries +ve (insig) for LI (MI and HI) for FDI from developed countries
Benzerrouk, Abid, and Sekrafi (2021)	31 developed and 100 developing countries: 1980–2016	GMM	−ve developed countries Insig developing countries
Huang et al. (2021)	G20: 1996–2018	FGLS	+ve
Singhania and Saini (2021)	21 Developed and developing countries: 1990–2016	GMM	−ve for full sample insig for developed countries +ve for developing countries
Xu, Huang, and An (2021)	42 countries	RE and FE	Insign
Dagar et al. (2022)	80 countries	PMG	+ve
Khan, Rana, and Ghardallou (2023)	108 developing countries; 2000–2016	P-veCM	Above a certain threshold, FDI reduces emissions
Wang, Yang, and Wang (2023)	67 countries: 1990–2019	PTAR	+ve (−ve) below (above) threshold of $542
Xaisongkham and Liu (2023)	115 developing countries: 2002–2006	GMM	+ve
Panel B: African panel studies (15)
Bokpin (2017)	52 African countries: 1990–2013	Panel FE	+ve
Ojewumi and Akinlo (2017)	33 SSA countries: 1980–2013	PVAR and PVECM	+ve
Acheampong (2019)	46 SSA countries: 1980–2015	FE and RE	−ve for high-income countries Insign for full sample and lower-income countries
Opoku, Adams, and Aluko (2021)	22 SSA countries: 1995–2014	GMM	−ve
Opoku and Boachie (2020)	36 African counties: 1980–2014	PMG	+ve
Tenaw (2020)	20 African countries; 1990–2017	CS-ARDL	Insig
Asiedu (2021)	20 African countries: 1995–2016	FMOLS, AMG, Quantile Regression causality tests	+ve from Q50 to Q95 insign otherwise Bidirectional causality
Gyamfi et al. (2021)	15 oil-producing and 28 non-oil-producing SSA countries: 1990–2016	OLS and quantile regressions and causality tests	−ve (+ve) at 5th (50^th to 95th) quantile and FDI->CO2
Halliru, Loganathan, and Hassan (2021)	6 ECOWAS countries: 1970–2017	FMOLS, quantile regressions	+ve at all quantiles expect 0.95
Tawiah, Zakari, and Khan (2021)	50 Africa: 1992–2014	PMG	−ve
Bouzahzah (2022)	40 African countries: 1988–2016	PARDL	+ve for full sample, +ve (−ve) for lower (high) institutional quality
Adjei-Mantey and Adams (2023)	29 SSA countries: 2006–2015	GMM	Insig.
Abdul-Mumuni, Amoh, and Mensah (2022)	41 SSA countries; 1996–2018	P-NARDL	Symmetry: +ve Asymmetry: +ve for increasing FDI, −ve for decreasing FDI
Boamah et al. (2023)	41 SSA countries: 2005–2019	FE and RE	Both −ve and + ve effect
Aminu, Clifton, and Mahe (2023)	11 SSA countries: 1995–2019	FMOLS	Insig
Panel C: African country-specific studies (10)
Kivyiro and Arminen (2014)	6 SSA countries: 1971–2009	ARDL	Insig for Congo, Zambia +ve for Kenya, Zimbabwe −ve for DRC, SA
Keho (2015)	12 ECOWAS countries: 1970–2010	ARDL	−ve for Cote d’Ivoire, Ghana, Mali, Nigeria +ve for Gambia, Liberia, Niger insig. For Benin, Burkina Faso, Senegal, Sierre Leone, Togo
Hakimi and Hamdi (2016)	Tunisia and Morocco: 1971–2013	VECM and PVECM	+ve
Solarin et al. (2017)	Ghana	ARDL	+ve
Solarin and Al-Mulali (2018)	20 Countries: 1990–2015	CCEMG	Insig for Egypt −ve for Nigeria +ve for South Africa
Mahmood et al. (2019)	Egypt: 1990–2014	ARDL	−ve long-run and short-run
Odubgesan and Adebayo (2020)	Nigeria:1986-2016	ARDL and NARDL	−ve for ARDL +ve in both partitions for NARDL
Zubair, Samad, and Dankumo (2020)	Nigeria: 1980–2018	ARDL and VAR causality	−ve and FDI→CO2
Awodumi (2021)	8 ECOWAS countries: 1980–2016	ARDL	Insig for Benin, Mali, Senegal, Sierra Leone, Togo −ve for Burkina Faso, Gambia, Nigeria
Udemba and Yalcintas (2021)	Algeria: 1970–2018	NARDL	+ve (insig) for + ve (−ve) partition

Table 2. Unit root tests results.

Country	ΔGHG	ΔFDI	ΔGDP	ΔAid	ΔTrade	ΔUrban
Algeria	−4.28***	−8.38***	−4.45***	−5.48***	−7.56***	−8.12***
Angola	−4.18***	−3.74***	−8.32***	−8.54***	−7.10***	−5.82***
Benin	−7.03***	−4.11***	−7.25***	−6.01***	−3.02**	−6.62***
Botswana	−6.14***	−5.59***	−4.96***	−4.02***	−7.03***	−6.29***
Burkina Faso	−7.31***	−4.84***	−9.97***	−4.43***	−9.12***	−3.55***
Burundi	−4.02***	−5.73***	−3.05**	−6.03***	−5.42***	−3.69***
Cabo Verde	−5.84***	−6.90***	−5.62***	−4.54***	−7.67***	−5.36***
Cameroon	−8.62***	−9.49***	−7.78***	−5.32***	−6.75***	−6.79***
CAR	−5.88***	−8.31***	−5.64***	−5.91***	−7.10***	−4.95***
Cote D’Ivoire	−3.27**	−7.99***	−4.07***	−6.09***	−5.95***	−3.22***
Chad	−5.10***	−2.93*	−3.76***	−8.59***	−10.05***	−3.53***
Comoros	−6.27***	−9.01***	−6.42***	−6.51***	−7.80***	−4.77***
Congo	−3.64**	3.31**	−3.36**	−3.71***	−5.28***	−9.71***
DRC	−4.87***	−10.29***	−3.90***	−6.34***	−7.18***	−3.13***
Djibouti	−7.59***	−4.96***	−7.45***	−5.54***	−6.89***	−4.08***
Egypt	−2.93*	−4.14***	−4.47***	−4.41***	−9.01***	−5.52***
Equatorial	−4.84***	−7.20***	−8.64***	−4.33***	−8.04***	−9.08***
Eritrea	−6.46***	−4.18***	−5.23***	−3.66***	−8.50***	−6.06***
Eswatini	−6.44***	−11.23***	−5.34***	−5.82***	−7.82***	−4.76***
Ethiopia	−411***	−4.74***	−4.28***	−5.31***	−3.34***	−7.77***
Gabon	−3.03*	−6.62***	−4.68***	−3.92***	−8.34***	−8.53***
Gambia	−2.93*	−5.99***	−5.43***	−7.13***	−7.02***	−4.57***
Ghana	−4.59***	−4.94***	−3.02*	−3.72***	−5.21***	−4.81***
Guinea	−6.71***	−5.37***	−5.54***	−5.01***	−5.42***	−5.10***
Guinea_b	−5.05***	−3.81***	−4.15***	−6.29***	−8.06**	−3.27***
Kenya	−5.45***	−5.32***	−9.44***	−4.18***	−5.51**	−7.75***
Lesotho	−6.34***	−8.29***	−4.08***	−4.56***	−5.82***	−5.42***
Liberia	−5.04***	−4.96***	−6.94***	−5.50***	−5.68***	−5.89***
Libya	−7.76***	−5.54***	−4.91***	−5.91***	−7.71***	−8.62***
Madagascar	−9.18***	−3.30**	−4.97***	−3.79***	−6.63***	−5.07***
Malawi	−7.91***	−7.79***	−5.23***	−6.23***	−4.46***	−3.03**
Mali	−6.47***	−7.30***	−6.36***	−6.26***	−3.78***	−8.74***
Mauritius	−6.70***	−3.38**	−8.02***	−4.03***	−3.66***	−4.32***
Morocco	−7.53***	−9.70***	−9.18***	−5.36***	−4.02***	−4.14***
Mozambique	−5.05***	−3.95***	−6.95***	−5.42***	−5.12***	−3.42***
Namibia	−4.86***	−6.61***	−9.85***	−7.56***	−8.52***	−4.54***
Niger	−8.92***	−7.76***	−4.08***	−8.04***	−6.81***	−3.74***
Nigeria	−5.48***	−6.33***	−8.97***	−4.23***	−5.82***	−4.80***
Rwanda	−6.69***	−5.09***	−8.19***	−4.10***	−5.33***	−5.18***
South Africa	−4.71***	−6.13***	−4.96***	−4.17***	−7.88***	−4.45***
Senegal	−6.46***	−5.18***	−7.63***	−5.58**	−7.48***	−4.80***
Seychelles	−5.11***	−5.83***	−5.23***	−6.61***	−7.70***	−4.89***
Sierra Leone	−5.52***	−5.59***	−4.49***	−6.38***	−8.94***	−3.91***
Somali	−7.61***	−4.96***	−6.86***	−5.90***	−3.24***	−3.34***
Sudan	−7.51***	−6.63***	−3.75***	−3.56***	−8.62***	−3.86***
Tanzania	−5.30***	−3.85***	−7.56***	−3.58***	−6.01***	−8.75***
Togo	−3.28***	−3.21**	−3.41**	−5.35***	−6.18***	−4.29***
Tunisia	−6.87***	−10.02**	−5.81***	−6.23***	−4.45***	−4.47***
Uganda	−5.41***	−5.82***	−4.76***	−3.19**	−3.16**	−4.51***
Zambia	−5.53***	−8.64***	−3.12**	−8.12***	−4.40***	−6.39***
Zimbabwe	−5.31***	−7.42***	−3.42***	−4.38***	−7.35***	−4.71***

Notes: ‘***’, ‘**’, ‘*’ denote 1%, 5% and 10% critical levels, respectively.

Table 3. ARDL regressions.

Country	Bounds test	Long-run coefficients					Short-run and error correction coefficients
		FDI	GDP	Aid	Trade	Urban	ΔFDI	ΔGDP	ΔAid	ΔTrade	ΔUrban	ECT/BDS tests
Algeria	✓	−	+	insig	insig	insig	−	+	insig	insig	insig	✓
Angola	✓	insig	+	insig	insig	+	insig	+	insig	insig	+	✓
Benin	✓	−	+	insig	insig	insig	−	+	insig	insig	insig	✓
Botswana	✗	insig	insig	insig	insig	insig	insig	insig	insig	insig	insig	✓
Burkina Faso	✓	insig	+	insig	insig	+	insig	+	insig	insig	+	✓
Burundi	✓	insig	+	insig	insig	+	insig	+	insig	insig	+	✓
Cabo Verde	✓	insig	insig	insig	+	+	insig	insig	insig	+	+	✓
Cameroon	✓	insig	insig	insig	insig	+	insig	insig	insig	insig	insig	✓
CAR	✓	+	insig	−	+	+	+	insig	−	+	+	✓
Cote D’Ivoire	✓	insig	+	insig	insig	−	insig	+	insig	insig	−	✓
Chad	✓	insig	+	insig	insig	+	insig	+	+	Insig	+	✓
Comoros	✓	insig	+	insig	insig	+	−	+	insig	+	insig	✓
Congo	✓	insig	insig	insig	insig	+	insig	insig	+	insig	+	✓
DRC	✓	insig	insig	insig	insig	+	insig	insig	insig	insig	insig	✓
Djibouti	✓	+	−	insig	insig	+	+	−	insig	insig	+	✓
Egypt	✓	insig	+	insig	insig	insig	insig	−	−	insig	insig	✓
Equatorial	✗	insig	insig	insig	insig	insig	insig	insig	insig	insig	insig	✓
Eritrea	✓	+	+	insig	−	−	+	+	insig	−	−	✓
Eswatini	✓	insig	insig	insig	insig	+	insig	insig	insig	insig	+	✓
Ethiopia	✓	insig	insig	insig	insig	insig	insig	insig	insig	insig	insig	✓
Gabon	✓	insig	+	insig	insig	insig	insig	+	insig	insig	insig	✓
Gambia	✗	insig	insig	insig	insig	insig	insig	insig	insig	insig	Insig	✓
Ghana	✓	−	+	insig	insig	insig	−	+	insig	insig	insig	✓
Guinea	✓	insig	+	insig	+	+	insig	insig	insig	+	+	✓
Guinea_b	✓	insig	insig	insig	insig	+	insig	insig	insig	insig	+	✓
Kenya	✗	insig	insig	insig	insig	insig	insig	insig	insig	insig	insig	✓
Lesotho	✗	insig	insig	+	insig	insig	insig	insig	insig	insig	insig	✓
Liberia	✗	insig	insig	insig	insig	+	insig	insig	insig	insig	insig	✓
Libya	✓	−	+	insig	insig	insig	−	+	insig	insig	insig	✓
Madagascar	✗	insig	insig	insig	insig	insig	insig	Insig	insig	insig	insig	✓
Malawi	✓	−	+	insig	insig	insig	−	+	insig	insig	insig	✓
Mali	✓	insig	insig	insig	insig	insig	−	insig	insig	insig	insig	✓
Mauritius	✓	insig	insig	−	insig	−	+	insig	−	+	−	✓
Morocco	✓	insig	+	−	+	insig	insig	+	−	+	insig	✓
Mozambique	✓	insig	+	insig	+	insig	insig	+	insig	+	insig	✓
Namibia	✓	+	−	+	−	+	+	−	+	−	+	✓
Niger	✓	insig	insig	insig	insig	insig	insig	insig	insig	insig	insig	✓
Nigeria	✓	−	+	insig	insig	insig	−	+	insig	+	−	✓
Rwanda	✓	insig	+	insig	insig	+	insig	+	insig	insig	+	✓
South Africa	✓	insig	+	insig	insig	insig	insig	+	+	insig	insig	✓
Senegal	✓	insig	+	insig	insig	insig	insig	+	insig	insig	insig	✓
Seychelles	✗	insig	insig	insig	insig	insig	insig	insig	insig	insig	insig	✓
Sierra Leone	✗	insig	insig	insig	insig	insig	insig	insig	insig	insig	insig	✓
Somali	✗	insig	insig	insig	insig	insig	insig	insig	insig	insig	insig	✓
Sudan	✓	insig	insig	Insig	insig	+	insig	insig	insig	insig	insig	✓
Tanzania	✓	insig	insig	insig	insig	+	insig	insig	insig	insig	insig	✓
Togo	✓	insig	insig	+	insig	+	insig	insig	+	insig	+	✓
Tunisia	✓	insig	+	insig	insig	insig	insig	+	insig	insig	insig	✓
Uganda	✓	insig	+	insig	+	insig	−	+	−	+	insig	✓
Zambia	✗	insig	+	insig	insig	insig	Insig	+	insig	insig	insig	✓
Zimbabwe	✗	insig	+	insig	insig	insig	Insig	+	insig	insig	insig	✓

Notes: All coefficient estimates are evaluated at 10% critical level.

Table 4. Diagnostic tests of ARDL regressions

Country	${}_{\mathrm{NORM}}^2$	${}_{\mathrm{SC}}^2$	${}_{\mathrm{HET}}^2$	${}_{\mathrm{FF}}^2$
Algeria	0.02	0.89	0.21	0.03
Angola	0.83	0.37	0.15	0.35
Benin	0.99	0.88	0.27	0.58
Botswana	0.45	0.51	0.96	0.97
Burkina Faso	0.01	0.24	0.12	0.00
Burundi	0.00	0.28	0.92	0.00
Cabo Verde	0.17	0.58	0.04	0.02
Cameroon	0.01	0.67	0.49	0.86
CAR	0.02	0.51	0.04	0.74
Cote D’Ivoire	0.01	0.47	0.40	0.09
Chad	0.00	0.47	0.72	0.72
Comoros	0.00	0.63	0.00	0.11
Congo	0.00	0.42	0.83	0.45
DRC	0.11	0.67	0.13	0.26
Djibouti	0.69	0.65	0.86	0.33
Egypt	0.99	0.83	0.57	0.92
Equatorial	0.00	0.92	0.12	0.03
Eritrea	0.05	0.87	0.93	0.48
Eswatini	0.45	0.59	0.92	0.21
Ethiopia	0.23	0.00	0.00	0.02
Gabon	0.31	0.96	0.63	0.39
Gambia	0.00	0.95	0.14	0.65
Ghana	0.00	0.49	0.47	0.00
Guinea	0.00	0.94	0.32	0.03
Guinea_b	0.00	0.06	0.94	0.49
Kenya	0.00	0.59	0.49	0.26
Lesotho	0.00	0.48	0.56	0.30
Liberia	0.00	0.00	0.10	0.00
Libya	0.00	0.35	0.49	0.55
Madagascar	0.74	0.97	0.12	0.07
Malawi	0.00	0.26	0.70	0.00
Mali	0.56	0.60	0.10	0.85
Mauritius	0.31	0.93	0.57	0.11
Morocco	0.93	0.80	0.10	0.03
Mozambique	0.72	0.06	0.00	0.25
Namibia	0.71	0.66	0.46	0.70
Niger	0.50	0.42	0.54	0.00
Nigeria	0.97	0.36	0.26	0.98
Rwanda	0.10	0.07	0.61	0.06
South Africa	0.87	0.52	0.15	0.20
Senegal	0.37	0.61	0.10	0.00
Seychelles	0.00	0.86	0.10	0.02
Sierra Leone	0.00	0.49	0.89	0.15
Somali	0.00	0.63	0.99	0.65
Sudan	0.79	0.90	0.16	0.17
Tanzania	0.22	0.97	0.42	0.95
Togo	0.00	0.61	0,16	0.81
Tunisia	0.00	0.84	0.98	0.58
Uganda	0.97	0.45	0.03	0.06
Zambia	0.07	0.87	0.54	0.85
Zimbabwe	0.15	0.38	0.11	0.72

Notes: p-values of diagnostic tests reported.

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Data availability statement

The data is available from the authors upon reasonable request.