Linking Industrialization and Environmental Quality in Sub-Saharan Africa: Does the Environmental Policy Stringency Matter?

This paper contributes to the literature on the relationship between industrialization and environmental quality. Despite an abundant literature on the subject, existing studies have not yet investigated the role of environmental policy stringency in the transmission of the effects of industrialization on environmental quality. This study uses a panel of 24 countries in sub-Saharan Africa (SSA) with data covering the period 2000–2020. The use of the system GMM methodology shows that industrialization – measured by – the value added of industry and the value added of manufacturing – significantly deteriorates the quality of the environment. However, the introduction of the environmental policy stringency variable as a transmission channel produces a detrimental effect of industrialization on CO2 emissions up to thresholds of 37.33 and 37 respectively for the industrial sector and the manufacturing sector. For an environmental policy stringency above these thresholds, industrialization significantly reduces CO2 emissions. Finally, we found the Environmental Kuznets Curve between economic growth and CO2 emissions. Thus, a strengthening of environmental policy can help these countries to develop a virtuous relationship between industrialization and the quality of the environment.