FDI inflows, energy consumption and sustainable economic growth for ECOWAS countries: the pollution haven hypothesis approach

Abstract

This study examined the pollution haven hypothesis for CO2 emissions and ecological footprint with the role of sustainable economic growth, energy consumption, human capital and bio-capacity in six ECOWAS countries using data spanning over 1970 until 2017. Employing a Pooled Mean Group (PMG) technique, the empirical results support the pollution halo hypothesis for CO2 emissions and Pollution Haven Hypothesis (PHH) for ecological footprint. Furthermore, we found evidence of inverted U-shaped pattern of CO2 emissions, which validate the EKC hypothesis, but a U-shaped relationship was found for ecological footprint as indicators of environmental degradation. A unidirectional causal link exists between FDI and CO2 emissions, but a feedback hypothesis is validated between FDI and ecological footprint. The policy implications are that environmentally friendly FDI should be prioritised to achieve a sustainable environment via developing renewable energy.