Transmission channels and indirect effects in the relationship between institutions and environmental degradation in Sub-Saharan Africa
by Daaki Sadat Ssekibaala; Muhammad Irwan Ariffin; Jarita Duasa
International Journal of Green Economics (IJGE), Vol. 15, No. 4, 2021

Abstract: This paper investigates the relationship between institutional quality and environmental degradation in Sub-Saharan Africa (SSA) focusing on identifying the transmission channels through which institutional quality indirectly affects environmental degradation. We follow the Stochastic regression on the Impact, Population, Affluence and Technology (STIRPAT) model and use annual panel data for 41 SSA countries between 1996 and 2017. The Generalised Method of Moments (GMM) method is used for empirical estimation. Our findings suggest that the Environmental Kuznets Curve (EKC) hypothesis is valid for CO₂ emissions and deforestation. We also find all institutional quality indicators to have direct effects on environmental degradation indicators which means that poor institutions can increase environmental degradation. Besides, we also find institutional quality to have indirect effects on environmental degradation and identify education, FDI, international trade, political stability, rule of law, energy intensity and population growth as transmission channels through which institutions affect environmental degradation.

Online publication date: Wed, 04-May-2022

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