Article Type : Research Article
Authors : Turay A, Seraj M and Ozdeser H
Keywords : Sierra Leone; Economic growth; Non-linear ARDL; Foreign direct investment; CO2 emissions
This study uses yearly time series data
from 1980-2020 and employ the Nonlinear Autoregressive distributed Lag model by
Shin et al (2014) to check the asymmetric effect of the independent variables
on the dependent variable (C02). In order to support the environmental Kuznet
curve and pollution haven hypotheses in Sierra Leone, this study analyzes the
link between CO2 emissions, urban population growth, energy consumption, and
foreign direct investment. The result from the ADF test shows that Energy consumption,
Economic growth and urban population growth are integrated at level (I (0)) at
1% level of significance for both EC and GDP and at 5% significance level for
UPG. FDI and CO2 are integrated at first difference at 1% significant level.
The NARDL bound test by Shin verify the existence of long run cointegrating
relationship among the variables this study supports the pollution haven
hypothesis in Sierra Leone, as both positive and negative shocks in FDI reduces
the effect of CO2 emission in the short run. This is in corroboration with
strict laws and regulations impose by the government and also encourage foreign
and domestics firms to import sophisticated plant and machinery, ban on the
importation of used cars more than 5 years and other carbon emission prone
machine and other equipment with high environmental degradation propensity.
Both positive and negative shocks on urban population growth contribute
significantly in reducing CO2 emission in Sierra Leone. An increasing in urban
population decreases the use of using traditional meaning of cooking practices
in most rural communities. The result of this study supports the Environmental
Kuznets curve and pollution haven hypotheses in Sierra Leone. This study shows
that both increase and decrease changes in GDP reduces C02 emissions, also both
positive and negative change in FDI reduces Carbon dioxide emissions in the
short run. The error correction term (ECT) shows a high speed of adjustment
(103%) in correcting any disequilibrium in the long run. The findings of this
study recommend that the central government continue to institute laws that
will encourage green environmental practices and in turn protect the
environment from future depletion. The approved FDI inflows in Sierra Leone
must be well coordinated and restricted to a productive and innovative
technological imprint which support FDI, Urbanization, clean energy consumption
and a significant growth in the economy. To address the issues of environmental
sustainability, polies that aim at combating the negative effect of climate
change should be induce.