Effect of Trade Openness on Ecological Footprint in Sub-Saharan Africa

Abstract

This study explores the effect of international trade measured by trade openness and foreign direct investment flows on environmental quality measured by ecological footprint in 23 Sub-Saharan African countries. It applies the Feasible Generalized Least Square method to the 1990-2015 panel data, after checking for cross-sectional dependence, serial correlation, heteroscedasticity, and the presence of cointegrating relationships to yield efficient and consistent coefficient estimates. Moreover, it deploys instrumental variable techniques to address the problem of endogeneity of trade openness and income. The results show that ecological footprint of consumption per capita decreases with an increase in trade openness and increases with an increase in foreign direct investment inflows. The results also confirm the presence of an Inverted-U shaped relationship between ecological footprint and GDP per capita. The study findings have policy implication for socioeconomic planning for sustainable development.