The effects of trade openness on CO2 emissions in Sub-Saharan Africa: fresh evidence from new measure

Abstract

This study assesses the effects of trade openness on carbon dioxide (CO₂) emissions in Sub-Saharan Africa (SSA). In contrast to previous studies, and in order to make a significant contribution to the empirical literature on the subject, we capture trade openness through a new and innovative approach that takes into account not only the share of a country’s trade in its gross domestic product but also the size of its trade in world trade. In addition, this study also stands out for its consideration of trade openness in different sectors of the economy (primary, secondary and tertiary). For the econometric strategies, the study used data from 38 SSA countries between 2002 and 2022 and estimated the effects by the Generalized Method of Moments (GMM) system and the double ordinary least squares method. The main results show that in SSA: trade openness contributes to rising CO₂ emissions. In addition, trade in the primary (agriculture), secondary (industry) and tertiary (services) sectors contributes to the increase in CO₂ emissions. The models used are controlled by several variables. The results show that the renewable energy consumption is a key driver of environmental quality, which seems to reduce CO₂ emissions. On the other hand, human capital, population growth and the quality of institutions increase CO₂ emissions. Furthermore, the interaction between openness and institutional quality has a negative impact on CO₂ emissions. Therefore, in order to reduce CO₂ emissions, SSA needs to put the environment on the agenda of future trade negotiations; to implement policies and strategies that guarantee growth without abandoning the environment.