Dynamic heterogeneous analysis of pollution reduction in SANEM countries: lessons from the energy-investment interaction
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RESEARCH ARTICLE
Dynamic heterogeneous analysis of pollution reduction in SANEM countries: lessons from the energy-investment interaction Ekundayo Peter Mesagan 1,2
&
Kazeem Bello Ajide 3 & Xuan Vinh Vo 4
Received: 9 April 2020 / Accepted: 14 September 2020 # Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract This scientific enquiry examines the role of capital investment in the energy-pollution model in SANEM countries. The methodology is based on the Pooled Mean Group (PMG), which is appropriate for a heterogeneous panel. Findings reveal that energy use negatively impacts CO2 emissions in Algeria, South Africa, Morocco, and the panel, in the shortrun; however, it positively impacts CO2 pollution in Nigeria, Egypt, and the panel, in the long-run. Again, investment exerts a positive effect on CO2 in South Africa and Algeria, whereas it is negative in Nigeria, Egypt, and Morocco. Capital investment also expands short-run pollution in the panel, but it reduces long-run pollution. Lastly, the energyinvestment interaction reduces the panel’s CO2 pollution in the short-run and long-run, as well as, in Morocco, Egypt, Nigeria, and South Africa, except in Algeria. Thus, we conclude that capital investment is crucial in the energy-pollution nexus and suggest cooperation in attracting low-carbon emitting investments to the region. Keywords Capital investment . Carbon emissions . Energy use . Energy policy . Africa JEL Classification Q32 . Q48 . Q53 . F23 . O55
Introduction The pace of economic growth in SANEM-emerging African nations (i.e. South Africa, Algeria, Nigeria, Egypt, and
Responsible editor: Philippe Garrigues * Ekundayo Peter Mesagan [email protected] Kazeem Bello Ajide [email protected] Xuan Vinh Vo [email protected] 1
School of Management and Social Sciences, Pan Atlantic University, Lagos, Nigeria
2
Institute of Business Research, University of Economics Ho Chi Minh City, Ho Chi Minh City, Vietnam
3
Department of Economics, University of Lagos, Lagos, Nigeria
4
Institute of Business Research & CFVG Ho Chi Minh City, University of Economics Ho Chi Minh City, Ho Chi Minh City, Vietnam
Morocco) calls for concern about its environmental effect. The Annex 2 classification of Africa by the UNFCCC1 due to its low industrial production and contribution to the global CO2 emissions necessitates this study. So, we demonstrate that Africa’s G5 requires more efforts for reducing pollution than some industrialised nations due to their production and pollution capacity. Usually termed as SANE2 countries, the recent strides by Morocco in terms of GDP and coal production despite not depending on crude oil production are remarkable, necessitating the modification of SANE to SANEM. For example, Egypt, South Africa, Algeria, and Nigeria are heavily dependent on petroleum, while Morocco is coal-dependent with a massive amount of coal-fired plants. Therefore, since pollution control through the capital investment channel is the focal point of this study, the need is to focus on SANEM. Again, SA
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