An Empirical Analysis of the Relationship between CO2 Emission and Economic Growth in West Africa

The paper empirically examined the relationship between CO2 emission and economic growth, using a Fixed Effects panel regression Model executed within a vector error correction framework for West African countries over the period 1970-2011. The results of cointegration indicate that there is a long-run equilibrium relationship between CO2 emission, Gross domestic product and other relevant covariates. The empirical results indicate that in the long run, there is an N-shape relationship between income and CO2 emission and that the EKC hypothesis is not supported for West Africa. It was found that the amount of CO2 emission and consequently the level of environmental pollution or quality in these countries are reflective of the rates of economic growth, the nature of macroeconomic policy, rapid population increases, domestic credit to private sector and trade openness. Both the short-run non-causality results show that economic growth, population growth rate, domestic credit to the private sector and trade openness Granger-cause carbon dioxide emission and are statistically significant, and these are supported by the estimated regression results which indicate a statistically significant positive relationship between CO2 emission and economic growth. It is recommended that while economic growth should be a focus, it is important that policies which enhance the quality of the environment be enacted and implemented among the countries in the region.