Innovation, Trade Openness and CO2 Emissions in Selected Countries in Africa

Abstract

Innovation is considered an effective tool for fighting CO2 emissions as it enhances energy efficiency and cleaner production. However, it has received limited attention in the context of Africa. Therefore, the study examines the nonlinear link between innovation and CO2 emissions in nine (9) African nations from 1990-2016 at both panel and individual country level. The cross sectional augmented Dickey Fuller (CADF) panel unit root test affirmed the stationarity of the variables. Westerlund and Johansen cointegration tests established a long-run link amongst the variables. The study employed fixed effect model and generalized method of moments for the panel and ordinary least square for individual country. The results validated an inverted U-shape relationship between innovation and CO2 emission at panel level and in Mauritius, Egypt, and South Africa. Renewable energy use lessens CO2 emissions at the panel level. Human capital decreases CO2 emissions at the panel and in some individual countries. Moreover, both pollution haven hypothesis and pollution halo effect were confirmed. Similarly, at the panel level Environmental Kuznets Curve was confirmed in 4 out of 9 countries. Our findings suggest that regional integration and assimilation of innovation into all stages of development for green growth should be pursued.