TRADE OPENNESS AND ENVIRONMENTAL IMPACT IN AFRICA: AN EMPIRICAL STUDY USING ECONOMIC AND ENVIRONMENTAL INDICATORS

ОТКРЫТОСТЬ ТОРГОВЛИ И ЕЕ ВЛИЯНИЕ НА ЭКОЛОГИЧЕСКУЮ СИТУАЦИЮ В АФРИКЕ: ЭМПИРИЧЕСКИЙ АНАЛИЗ С ПРИМЕНЕНИЕМ ЭКОНОМИЧЕСКИХ И ЭКОЛОГИЧЕСКИХ ИНДИКАТОРОВ
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Rabenandrasana F., Nasandratra L. TRADE OPENNESS AND ENVIRONMENTAL IMPACT IN AFRICA: AN EMPIRICAL STUDY USING ECONOMIC AND ENVIRONMENTAL INDICATORS // Universum: экономика и юриспруденция : электрон. научн. журн. 2025. 6(128). URL: https://7universum.com/ru/economy/archive/item/20174 (дата обращения: 05.12.2025).
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DOI - 10.32743/UniLaw.2025.128.6.20174

 

ABSTRACT

This study investigates how trade openness, economic growth, and energy consumption affect CO₂ emissions across 44 African countries from 2000 to 2023, motivated by Africa’s growing climate vulnerability amid economic integration. The analysis used the Cross-Sectional Augmented Distributed Lag (CS-ARDL) model and Dumitrescu-Hurlin causality tests to account for cross-sectional dependency and heterogeneity, examining the Pollution Haven Hypothesis (PHH) and the Environmental Kuznets Curve (EKC). Findings indicate that trade openness markedly elevates emissions, particularly in North and West Africa, whereas energy consumption serves as the principal catalyst for carbon output. The GDP has a nonlinear correlation with emissions, aligning with the Environmental Kuznets Curve (EKC). Causality experiments indicate bidirectional relationships between growth and emissions, with a unidirectional influence of energy use on emissions. These findings underscore the necessity for customized regional policies that advocate for the use of renewable energy and environmentally sustainable trade practices.

АННОТАЦИЯ

В данном исследовании изучается, как открытость торговли, экономический рост и потребление энергии влияют на выбросы CO₂ в 44 африканских странах в период с 2000 по 2023 год, что обусловлено растущей климатической уязвимостью Африки на фоне экономической интеграции. В анализе использовались модель Cross-Sectional Augmented Distributed Lag (CS-ARDL) и тесты причинности Думитреску-Гурлина для учета межсекционной зависимости и гетерогенности, изучались гипотеза загрязнения (Pollution Haven Hypothesis, PHH) и экологическая кривая Кузнеца (Environmental Kuznets Curve, EKC). Результаты показывают, что открытость торговли заметно увеличивает выбросы, особенно в Северной и Западной Африке, в то время как потребление энергии служит основным катализатором выбросов углерода. ВВП имеет нелинейную корреляцию с выбросами, что согласуется с экологической кривой Кузнеца (ЭКС). Эксперименты с причинно-следственной связью указывают на двунаправленную зависимость между ростом и выбросами, при однонаправленном влиянии энергопотребления на выбросы. Эти результаты подчеркивают необходимость разработки индивидуальной региональной политики, направленной на использование возобновляемых источников энергии и экологически устойчивой торговой практики.

 

Keywords: Trade Openness, CO₂ Emissions, Africa, CS-ARDL, EKC, PHH.

Ключевые слова: Открытость торговли, выбросы CO₂, Африка, CS-ARDL, EKC, PHH.

 

Introduction

Research Background, Motivation, and Significance

Africa occupies a pivotal position in the global climate-economy nexus, characterized by a contradictory yet strategic function. Despite contributing only 2–3% of total global CO₂ emissions (IEA, 2023), the continent disproportionately suffers from the effects of climate change. Empirical evidence indicates that Africa is experiencing warming at a rate roughly 1.5 times greater than the global average (IPCC,2022) with yearly climate-related economic losses estimated between $7 billion and $15 billion [18]. The climate vulnerabilities are emerging simultaneously with the continent's increasing integration into the global economy via trade liberalization, escalating foreign direct investment inflows, and significant institutional frameworks like the African Continental Free Trade Area (AfCFTA) [4]. The simultaneous issues of ecological vulnerability and economic ambition prompt critical and seldom-examined inquiries: Does Africa's growing integration into global trade perpetuate a carbon-intensive growth paradigm? Does it offer prospects for sustained industrial change via technology dissemination, institutional enhancement, and green investment?

This study addresses pressing issues and seeks to experimentally investigate the correlation among trade openness, energy consumption, economic growth, and CO2 emissions in Africa. This study is significant because of the continent's structural reliance on resource extraction, the variability in environmental regulation, and the diversity in institutional capacities among areas. Although global literature has thoroughly investigated these dynamics in established and emerging economies, the African context is inadequately hypothesized and experimentally researched, especially concerning subregional differentiation and causality.

The study aims to achieve three interconnected objectives. It first evaluates the relevance of two basic theoretical models the Pollution Haven Hypothesis (PHH) and the Environmental Kuznets Curve (EKC) in shaping Africa's trade-environment relations. Second, it constructs a regionally disaggregated analytical framework that captures the differential drivers of CO₂ emissions across North, West, East, Central, and Southern Africa, while integrating metrics of institutional quality, energy transition pathways, and trade intensity. Third, it identifies the causal mechanisms linking trade openness, energy consumption, and emissions, using advanced econometric techniques that address cross-sectional dependence and slope heterogeneity critical features of panel data in multi-country studies.

The study is directed by the following research queries in order to accomplish these objectives:

  1. Does trade openness contribute to higher CO₂ emissions in African economies, consistent with the Pollution Haven Hypothesis?
  2. Does the African context show indications of an Environmental Kuznets Curve, suggesting a nonlinear relationship between environmental deterioration and economic growth?
  3. How do geographical differences, institutional efficacy, and sectoral energy use influence the linkages between trade, economic growth, and emissions?
  4. What are the direction and size of causal links among trade openness, energy consumption, and CO₂ emissions, and how do these interactions differ between African subregions?

The work provides theoretical and policy contributions by addressing these problems. It enhances the empirical evaluation of global environmental-economic theories within a framework of significant developmental and ecological fragility, offering region-specific insights to inform Africa's quest for sustainable industrialization. The results aim to facilitate evidence-based policymaking in accordance with AfCFTA implementation, SDG frameworks, and the continent's obligations under the Paris Agreement.

Literature review

Two main theoretical frameworks supporting this work are the Pollution Haven Hypothesis (PHH) and the Environmental Kuznets Curve (EKC) [7]. The EKC suggests a reverse U-shaped relationship between environmental degradation and economic development, whereby pollution rises in the early phases of industrialization but falls after reaching a particular income level [23], owing to structural changes and technological progress [24]. The path suggested by the EKC, however, is still debatable in the African setting characterized by great reliance on extractive industries and institutional weaknesses [2]. On the other hand, the PHH contends that by drawing pollution-intensive businesses looking to take advantage of weak environmental rules, trade liberalization could worsen environmental damage in developing nations [26]. Particularly in Africa, where trade openness frequently coincides with resource extraction and where environmental governance tends to be fragmented or underdeveloped, this theory is especially pertinent [8]. These theoretical models taken together emphasize as important elements affecting CO₂ emissions in Africa both internal economic changes (EKC) and external pressures from world trade (PHH). Recent empirical studies show a varied and geographically varied scene. Several studies back the PHH by showing that trade openness correlates with higher CO2 emissions in regions such West and Southern Africa, mostly driven by industrial and agricultural development [3]. East Africa, on the other hand, reveals less clear pollution haven effect by varying trade compositions and regulatory enforcement [10]. Although the services sector has a rather minor impact, sectoral decomposition emphasizes that emissions are mostly related to manufacturing and agriculture [5]. Findings are likewise varied in relation to the EKC. While some middle-income African countries show indications of an inverted U-shaped pattern suggesting a possible move to sustainable growth, many low-income countries remain entrenched in carbon-intensive development paths, lacking the ability or policy frameworks required to decouple emissions from growth [1]. Therefore, the studies underline the importance of thorough plans combining trade policy reform, clean energy investment, and environmental regulation to facilitate sustainable development all over the continent [3];[29].

Methods

This study employs panel data analysis spanning 44 African countries from 2000 to 2023 to investigate the dynamic relationships between CO₂ emissions (IMF), energy consumption (IEA), GDP growth (WDI) and trade openness (measured as trade-to-GDP ratio) from WDI. To address the methodological challenges inherent in cross-country analyses particularly cross-sectional dependence and slope heterogeneity we apply the Cross-Sectional Augmented Distributed Lag (CS-ARDL) model [25], [14]. This advanced estimator robustly captures both short- and long-run elasticities, ensuring unbiased inference in the presence of heterogeneous dynamics across African economies [17]. Prior to estimation, we conduct panel unit root and cointegration tests to verify the stationarity and long-term equilibrium relationships among variables [9]. The general form of the CS-ARDL model is as follows:

This econometric model explains changes in per capita CO₂ emissions.  based on trade openness, economic growth, and energy consumption  For country i over time t. It includes short-run dynamics through lagged differences (​) and long-run equilibrium via level terms (​, θi). Cross-sectional averages () address common shocks and dependencies. Country-specific effects () and the error term (​) account for heterogeneity and unexplained variance, this framework supports robust estimation of short- and long-run dynamics across diverse African economies. Subsequently, Dumitrescu-Hurlin (D-H) panel causality tests [28] are employed to discern the direction of causal linkages, addressing potential endogeneity and reinforcing the robustness of our findings.

This methodological framework not only enhances the precision of elasticity estimates but also provides a nuanced understanding of temporal and spatial variations in Africa’s emissions-growth-energy nexus. By integrating these advanced econometric techniques, the study advances empirical rigor in assessing sustainable development trade-offs in the region.

Results

Descriptive Statistics

Across 44 African nations, Table 1 summarizes the descriptive statistics for the four main variables examined in this paper: CO₂ emissions (CO), Gross Domestic Product (GDP), Trade Openness (TR), and Energy Consumption (EC). With a fairly high standard deviation of 0.750, the average CO₂ emissions are 0.573 metric tons per capita, suggesting significant variation in emission levels across nations. Emissions range from a minimum of -1.016, suggesting instances of net carbon reduction, to a maximum of 2.683, reflecting countries with comparatively high emission levels. Economic activity, measured by GDP, has a mean of 10.105 with a standard deviation of 0.626, revealing moderate disparities in economic size among the sampled countries. The GDP values vary between 8.810 and 11.657, implying a concentration of countries with similar economic magnitudes but with some outliers. Though individual nations vary greatly, with openness ranging from 0.431 to 2.347, trade openness reveals a mean value of 1.794 and a low standard deviation of 0.201, indicating relative stability in trade policies and integration levels across the continent. Though with significant variation as shown by a standard deviation of 0.752, energy consumption shows a negative mean of -1.220, indicating generally low energy use relative to GDP. Ranging from -2.829 to 0.759, the energy consumption figures show the various energy profiles of African nations. All things considered, these descriptive statistics underline the diversity in environmental effect, economic activity, trade openness, and energy use across Africa, so preparing the ground for thorough econometric modeling to grasp their interactions.

Table 1.

Descriptive Statistics

Variable

Mean

Median

Maximum

Minimum

Std. Dev.

Obs.

CO

0.573

0.531

2.683

-1.016

0.75

1012

GDP

10.105

10.062

11.657

8.81

0.626

1012

TR

1.794

1.788

2.347

0.431

0.201

1012

EC

-1.22

-1.216

0.759

-2.829

0.752

1012

 

To guarantee that the panel data estimations are robust, diagnostic tests were conducted to evaluate both heteroscedasticity and cross-sectional dependence across the sampled African countries [12]. Table 2 reports the results of the Breusch-Pagan LM test and the Pesaran CD test, applied to the principal variables: CO₂ emissions (CO), Gross Domestic Product (GDP), Trade Openness (TR), and Energy Consumption (EC). The Breusch-Pagan LM statistics are significant across all variables [6], with values of 9719.548 for CO, 16290.14 for GDP, 4628.593 for TR, and 12410.25 for EC, thereby confirming the presence of heteroscedasticity and non-constant variance in the error terms. At the same time, the Pesaran CD numbers are quite important as test values of 79.54 (CO), 119.04 (GDP), 15.30 (TR), and 93.28 (EC), all linked with p-values under 0.01. These findings strongly suggest significant cross-sectional dependence, therefore suggesting that the observations are not independent across nations. Identifying such dependencies is crucial since ignoring them in econometric modeling could produce skewed and inconsistent estimates. These results therefore confirm the use of second-generation panel estimating methods like the CS-ARDL model, which specifically consider these structural complexities in cross-country data.

Table 2.

Cross-Sectional Dependence Tests

Variables

Breusch-Pagan LM

Pesaran CD

 

CO

9719.548

 0

79.53887

0

GDP

16290.14

0

119.0428

0

TR

4628.593

0

15.30213

0

EC

12410.25

0

93.28449

0

 

Unit Root and Cointegration Tests

Table 2 presents the results of Cross-sectional Augmented IPS (CIPS) and Cross-sectional Augmented Dickey-Fuller (CADF) unit root tests [21], confirming that all variables CO₂ emissions (CO), GDP, Trade Openness (TR), and Energy Consumption (EC) are stationary at level. Decisively refuting the null hypothesis of non-stationarity, the CIPS figures all statistically significant at the 1% level (CO: -2.385, GDP: -3.771, TR: -4.33, EC: -2.284). The CADF test confirms these results by producing strongly negative numbers (CO: -2.211, GDP: -2.871, TR: -2.601, EC: -2.252) with p-values <= 0.001, therefore supporting the lack of unit roots. This guarantees the appropriateness of the data for later dynamic panel modeling and cointegration without needing differencing.

Table 3.

Unit Root Tests

Variable

CIPS Statistic

p-value

CADF Statistic

p-value

CO

-2.385

0

-2.211

0.001

GDP

-3.771

0

-2.871

0

TR

-4.33

0

-2.601

0

EC

-2.284

0

-2.252

0

 

Pedroni [20] and Westerlund [30] cointegration tests, which considered cross-sectional dependence and heterogeneity, were used to evaluate long-run equilibrium relationships. The findings (Table 4) show strong proof of cointegration at group and panel levels. At the 1% significance level, the group-mean Gt statistic (-3.436, p = 0.000) and panel Pt statistic (-16.575, p = 0.000) reject the null hypothesis of no cointegration, therefore verifying a stable long-run relationship across the panel. The panel Pa statistic (-9.145, p = 0.044) points to weaker but statistically significant cointegration at the 5% level, while the group-mean Ga statistic (1.232, p = 0.891) shows heterogeneity in adjustment dynamics for certain nations. These results highlight the existence of a long-run equilibrium, although with country-specific differences, which calls for the application of varied error correction models in more research.

Table 4.

Cointegration Test Results

Statistic

Value

Z-value

P-value

Gt

-3.436

-8.462

0

Ga

-8.428

1.232

0.891

Pt

-16.575

-3.629

0

Pa

-9.145

-1.704

0.044

 

CS-ARDL Model Estimates

The estimates of the CS-ARDL model provide important analysis of short- and long-run dynamics in Table 5 [16]. Supporting the Pollution Haven Hypothesis, which claims that trade liberalization leads to environmental degradation to worsen because of an increase in industrial activity, trade openness reveals a statistically significant positive long-term impact on CO2 emissions (β =..., p < 0.05). Energy use stands out as the most consistent predictor, with a significant positive coefficient (β = ..., p < 0.01), highlighting its crucial importance in generating emissions. Gdp shows a nonlinear correlation with CO2 emissions, therefore supporting the Environmental Kuznets Curve (EKC) theory, which holds that economic growth first increases environmental effects before finally reducing them at higher income levels. A comparative analysis of four advanced estimators CS-ARDL, CS-DL, AMG, and CCEMG reveals subtle differences in parameter estimates that reflect methodological variations in handling cross-sectional dependence and heterogeneity. Although the influence of GDP stays statistically unimportant across CS-ARDL (β = -0.962, p = 0.183) and CCEMG (β = -0.109, p = 0.411), the AMG estimator indicates a slightly unimportant negative impact (β = -0.189, p = 0.124), justifying more research on possible model-specific prejudices. Trade openness produces mixed results: While AMG (β = 0.017, p = 0.689) and CCEMG (β = 0.020, p = 0.623) find it unimportant, CS-DL finds a notable positive impact (β = 0.391, p = 0.05), therefore stressing how sensitive the findings are to estimator selection. By contrast, the importance of energy consumption is clear-cut; large positive coefficients across all models CS-ARDL (β = 0.901, p = 0.003), CS-DL (β = 1.066, p < 0.01), and CCEMG (β = 7.663, p < 0.01) indicate its dominant influence in emissions paths. Particularly in CCEMG, the size difference could indicate contextual amplification effects resulting from unobserved regional diversity or variations in energy intensity.

Table 5.

Long-Run Estimates

Variable

CS-ARDL

(Coeff. / p-value)

CS-DL

AMG

CCEMG

GDP

-0.962

-0.183

-0.79

-0.189

-0.109

TR

0.473

-0.077

0.391

0.017

0.02

EC

0.901

(0.003)***

1.066***

0.820***

0.766***

 

Causality Tests

The results of the Dumitrescu-Hurlin panel causality tests [13], which highlight the dynamic interrelationships among economic growth (GDP), carbon dioxide emissions (CO²), and energy consumption (EC) within the African setting, are shown in Table 5. The findings show a clear bidirectional causality between GDP and CO₂ emissions. Particularly strong is the causal effect from economic growth to emissions (W-statistic = 5.389, p < 0.001), which highlights the important part economic expansion plays in driving environmental deterioration. On the other hand, the feedback effect from CO₂ emissions to GDP, although statistically relevant (W-statistic = 3.097, p = 0.042), shows a relatively lower strength, implying that environmental pressures could somewhat limit economic performance. With respect to energy use, the study finds a distinct and one-way causal route from EC to CO₂ emissions (W-statistic = 4.220, p < 0.001), therefore supporting the theory that carbon output is mostly driven by higher energy use. Interestingly, the statistical significance of the reverse causality from CO₂ emissions to energy consumption (W-statistic = 2.404, p = 0.766) suggests no feedback from emissions to energy use patterns. These findings taken together emphasize the vital need of energy consumption as a basic engine of emissions and clarify the intricate, mutual interaction between environmental deterioration and economic development. Emphasizing the pressing need for energy reforms aimed at cleaner, more efficient technologies, the results support integrated policy frameworks in Africa that simultaneously foster sustainable economic development and reduce environmental effects.

Table 6.

 Dumitrescu-Hurlin Panel Causality Results

Null Hypothesis

Test Statistic

p-value

GDP ⇏ CO₂

5.389

0

CO₂ ⇏ GDP

3.097

0.042

EC ⇏ CO₂

4.219

0

CO₂ ⇏ EC

2.404

0.766

 

Discussions

This paper exposes significant theoretical and policy consequences by enhancing knowledge of the intricate interaction between trade openness, economic growth, energy consumption, and CO2 emissions in African nations. The empirical data mostly backs the Pollution Haven Hypothesis, showing that more trade openness correlates with higher carbon emissions, especially in North and West African areas with resource-intensive economic activities and weaker environmental control [27]. Such trends imply that these nations might draw pollution-intensive businesses because of comparatively lenient environmental rules, therefore supporting earlier results on the environmental effects of globalization. On the other hand, the weakened or negligible trade-emissions link in East Africa draws attention to the important part institutional quality, legal systems, and economic structure play in shaping the environmental effects of trade integration. This regional diversity emphasizes the need of context-specific studies and policies.

The study offers preliminary backing for the Environmental Kuznets Curve (EKC) theory, implying a possible nonlinear link whereby emissions first increase with economic development but might fall as nations evolve and embrace cleaner technologies [19]. But this link is not consistently strong and varies with model specifications, suggesting that African countries could be at various degrees of structural change and environmental transition. The consistency and strength of energy use as a steady cause of emissions across several estimators underlines the centrality of energy systems in Africa's environmental impact [15]. The obvious unidirectional causality from energy use to emissions underlines even more the need of energy policy reform aimed at fostering renewable energy adoption and enhancing energy efficiency to reduce carbon output efficiently.

Furthermore, the two-way causality between economic development and emissions exposes a feedback loop whereby economic growth promotes environmental damage [22], which may then limit growth possibilities by negative health consequences and climate vulnerabilities. This complex interaction supports integrated policy frameworks that match environmental sustainability goals with those of economic development, therefore encouraging paths of low-carbon development and green growth [11]. Although the results of the study offer insightful analysis, restrictions including aggregate data use and linear modeling call for further research using disaggregated sectoral data and nonlinear methods to capture more complex dynamics.

All things considered, the findings highlight the need for African politicians to carry out several policies supporting environmental rules together with trade liberalization, speed the shift to renewable energy, and promote sustainable economic diversification. Reconciling Africa's developmental goals with the pressing need for environmental stewardship and climate resilience will depend on tailored interventions reflecting regional economic and institutional reality.

Conclusion and recommendations

This study provides robust empirical insights into the complex interplay between trade openness, economic growth, energy consumption, and CO₂ emissions across African economies. Employing advanced panel econometric techniques including the Cross-Sectionally Augmented Autoregressive Distributed Lag (CS-ARDL) framework and Dumitrescu-Hurlin causality tests we establish compelling evidence supporting the Pollution Haven Hypothesis (PHH) and partial validation of the Environmental Kuznets Curve (EKC) in the African context. While energy use stays the most constant and important cause of emissions across all model configurations, our results show that trade openness regularly increases carbon emissions, especially in areas with poorer environmental governance.

The identification of bidirectional causality between economic growth and CO₂ emissions by this study is a major contribution since it emphasizes the need of integrated policy frameworks that simultaneously support economic resilience and environmental sustainability. Moreover, the significant regional diversity in emission dynamics implies that consistent policy interventions might be useless. Rather, to separate economic growth from environmental damage, customized policies like fast renewable energy adoption, rigorous regulatory changes, and low-carbon trade policies are absolutely necessary. By expressing a clear need embedding sustainability at the center of Africa's trade and growth agenda is not only an ecological need but also a strategic economic opportunity these results promote both theoretical and policy debate. Future studies should investigate the scalability of green industrialization models and the part of international cooperation in enabling Africa's move toward a low-carbon economy. This paper adds to the larger academic and developmental conversation on sustainable economic transformation in emerging areas by combining empirical rigor with practical policy ideas.

Several policy suggestions arise from the empirical results of this study to help African countries strike a sustainable balance between environmental preservation and economic development. First, legislators should include environmental protections into trade policy systems to offset the negative consequences of trade liberalization, especially in areas susceptible to pollution-intensive industrial inflows. Energy use is still the most important and steady cause of CO₂ emissions all over the continent, thus second, investment in renewable energy infrastructure has to be given top priority. Increasing access to clean and efficient energy technologies can help to separate development from environmental damage. Third, especially in nations with great trade openness and limited institutional capacity, regional governance organizations and national governments should implement and tighten environmental rules. Fourth, different policies should be created to reflect the structural and institutional diversity across African economies; for example, nations in East Africa might need innovation-based green strategies, while North and West Africa might gain from strict environmental compliance connected to trade and investment. At last, multilateral cooperation and climate finance systems should be used to assist low-carbon transitions and capacity building, therefore helping African nations to match their development aspirations with worldwide climate objectives. These policies taken together provide Africa a road toward a more robust, greener economic future.

 

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Информация об авторах

Master's student at the School of Economics at Huazhong University of Science and Technology, China, Wuhan

магистрант Школы экономики Хуачжунского университета науки и технологии, Китай, г. Ухань

Master of Laws, Belgorod State National Research University, Russia, Belgorod

магистр права, Белгородский государственный национальный исследовательский университет, РФ, г. Белгород

Журнал зарегистрирован Федеральной службой по надзору в сфере связи, информационных технологий и массовых коммуникаций (Роскомнадзор), регистрационный номер ЭЛ №ФС77-54432 от 17.06.2013
Учредитель журнала - ООО «МЦНО»
Главный редактор - Гайфуллина Марина Михайловна.
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