Trade liberalization dynamics and ecological footprints in evolving sub-Saharan African economies

Abstract

The paper investigated the dynamic relationship between trade liberalization and ecological footprints, across 35 Sub- Sahara African (SSA) economies from 1999 to 2024. Specifically, the paper sought to investigate the impact of foreign direct investment, trade openness, economic growth, globalization, and exchange rates on ecological footprints, proxied by carbon dioxide (CO₂) emissions. Control variables include urbanization, agricultural land use, and energy consumption. With data sourced from the World Development Indicator (WDI) and International Monetary Fund (IMF) bulletins, the study employed the Cross-Sectionally Augmented Autoregressive Distributed Lag (CS-ARDL) technique and Augmented Mean Group (AMG) estimators for robustness. Based on the analysis, the study found that trade openness and FDI inflows significantly increases CO₂ emissions. Globalization (KOF Index) reduces CO₂ emissions and exchange rate depreciation has a weak positive effect on emissions. The error correction term (-0.345) indicates moderate adjustment speed of 34.5% annually. Conclusively, trade liberalization in SSA currently exacerbates CO₂ emissions, but broader globalization offers mitigating pathways. Hence, the paper recommends the inclusion of green FDI screening, renewable energy investment, and environmental development assistance to reduce degradation and protect the environment.