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The Nexus Between Renewable Energy Consumption, Financial Development, and Trade Openness Based on Environmental Quality in Uganda: An Application of the ARDL

Author

Listed:
  • John Bbale Mayanja

    (School of Economics, Makerere University, P.O Box 7062, Kampala, Uganda,)

  • Brian Arinaitwe

    (Department of Economics Kansas State University, 327 Waters Hall, Manhattan, KS 66506, USA,)

  • Ronald Kasaijja

    (National Planning Authority, P.O BOX 21432, Kampala, Uganda,)

  • John Mutenyo

    (School of Economics, Makerere University, P.O Box 7062, Kampala, Uganda,)

  • Edward Damulira Sengonzi

    (Ministry of Finance, Planning And Economic Development, P.O Box 8147, Uganda.)

Abstract

Environmental degradation is attributed to human activities associated with economic development. This study examines renewable energy consumption (REC), financial development (FD), trade openness, and environmental quality nexus in Uganda over the period 1990-2019 using the Autoregressive Distribution Lag (ARDL). Findings show that REC improves environmental quality both in the short and long run. In addition, while trade openness is negatively related to environmental quality in the short and long run, a negative correlation exists between FD and environmental quality only in the long run. Furthermore, economic growth has a positive relationship with environmental quality in the short run while in the long run, GDP2 improves environmental quality. However, the results from the study find no statistical relationship between FDI and environmental quality, and thus neither the pollution haven nor pollution halo hypotheses are confirmed in the Ugandan case. This paper does not only recommend investing more in renewable energy development to improve the quality of the environment but also in financial sector development to support investments that promote a low-carbon and green economy.

Suggested Citation

  • John Bbale Mayanja & Brian Arinaitwe & Ronald Kasaijja & John Mutenyo & Edward Damulira Sengonzi, 2024. "The Nexus Between Renewable Energy Consumption, Financial Development, and Trade Openness Based on Environmental Quality in Uganda: An Application of the ARDL," International Journal of Energy Economics and Policy, Econjournals, vol. 14(3), pages 711-718, May.
    • Handle: RePEc:eco:journ2:2024-03-73
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    References listed on IDEAS

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    More about this item

    Keywords

    Environmental Quality; Carbon Dioxide Emissions; Financial Development; Trade Openness; Renewable Energy Consumption; ARDL;
    All these keywords.

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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