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Efficiency of Financial Integration, Foreign Direct Investment and Output Growth: Policy Options for Pollution Abatement in Africa

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Abstract

This paper evaluates the impact of financial integration on environmental pollution through foreign direct investment and output growth channels between 1980 and 2017. The study employs panel cointegration techniques using the fully modified ordinary least squares to estimate the country-specific and panel data from the five largest African nations. The findings show that financial integration positively impacts pollution in Nigeria, Algeria, Egypt, Angola, and in the panel, while it reduces pollution in South Africa. Also, financial integration lowers pollution through the foreign investment channel in the panel, Nigeria, Egypt, Angola and Algeria, but not in South Africa. Lastly, financial integration increases pollution through the output growth channel in the panel, Algeria, South Africa, Nigeria and Angola, but not in Egypt. Pollution-reduction policies are then recommended for the African region.

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  • E P Mesagan, 2021. "Efficiency of Financial Integration, Foreign Direct Investment and Output Growth: Policy Options for Pollution Abatement in Africa," Economic Issues Journal Articles, Economic Issues, vol. 26(1), pages 1-19, March.
    • Handle: RePEc:eis:articl:121mesagan
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    Cited by:

    1. Mesagan, Ekundayo Peter & Olunkwa, Chidi Ndubuisi, 2022. "Heterogeneous analysis of energy consumption, financial development, and pollution in Africa: The relevance of regulatory quality," Utilities Policy, Elsevier, vol. 74(C).
    2. Yusuf, Ismaila Akanni & Salaudeen, Mohammed Bashir & Agbonrofo, Hope, 2021. "Social and Economic Drivers of Stock Market Performance in Nigeria," MPRA Paper 111086, University Library of Munich, Germany.
    3. Ekundayo Peter Mesagan & Kolawole Kushimo & Dominic Ikoh Umar, 2021. "Do fluctuations in exchange rate hinder non-oil export? An analysis of agriculture and manufacturing in Nigeria," SN Business & Economics, Springer, vol. 1(11), pages 1-23, November.
    4. Lifang Guo & Hewu Kuang & Zehua Ni, 2023. "A step towards green economic policy framework: role of renewable energy and climate risk for green economic recovery," Economic Change and Restructuring, Springer, vol. 56(5), pages 3095-3115, October.
    5. Mesagan, Ekundayo Peter & Vo, Xuan Vinh, 2023. "Does natural resource rent and consumption interplay worsen Africa's pollution? Heterogeneous panel approach with cross-sectional dependence," Resources Policy, Elsevier, vol. 82(C).
    6. Ekundayo Peter Mesagan & Emeka Osuji & Hope Agbonrofo, 2022. "Comparative Analysis of the Growth Impact of Pollution and Energy Use in Selected West African Nations," Working Papers of the African Governance and Development Institute. 22/032, African Governance and Development Institute..
    7. Ekundayo Peter Mesagan, 2022. "Environmental Sustainability in Sub-Saharan Africa: the Case of Production and Consumption Activities," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(4), pages 2840-2867, December.

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    More about this item

    Keywords

    Africa; Economic Growth; Financial Integration; Foreign Direct Investment;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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