An Application of Quantile Regression on the Relationship between Economic Growth and the Quality of Environment in Selected African Countries

This study examined the determinants factors of environmental quality by employing a panel quantile regression to incorporate the effects of economic growth on the quality of the environment and ascertain the validity of the EKC hypothesis within the research background of seven leading African economies over the period ۱۹۷۰ to ۲۰۱۹. The advantage of this method is considering the distributional heterogeneity to provide a detailed description of the linkage between CO۲ emissions and driving factors at different emissions levels. The results show that the effects of determinants on CO۲ emissions are heterogeneous. Besides, the quantile regression estimate describes the economic growth influence on CO۲ emissions to be positive and higher at the ۵۰th quantile than in other classes of quantiles. The square of economic growth tends to have an insignificant effect on the ۱۰th and ۲۵th quantiles but the effect is negative and significant on the ۵۰th, ۷۵th, and ۹۰th quantiles. This justifies the presence of the EKC hypothesis on the ۵۰th, ۷۵th, and ۹۰th quantiles. The empirical results of the study reveal that the EKC hypothesis is supported in these leading African economies. Consequently, policymakers should center on the heterogeneous effects of driving forces on CO۲ emissions in different quantiles during the process of carbon emission reductions.

Keywords:

economic growth , environment , FDI , Financial Development , quantile regression