Original scientific paper
https://doi.org/10.1080/1331677X.2021.2010112
Effect of institutional quality and foreign direct investment on economic growth and environmental quality: evidence from African countries
Mei Ling Wang
Vincent Sarkodie Ntim
Jiameng Yang
Qiongjie Zheng
Limin Geng
Abstract
This study applies the method of the fully modified ordinary least
squares (FMOLS) method and the vector error correction model
(VECM) to explore whether institutional quality (IQ) and foreign
direct investment (FDI) promoted economic growth (EG) and
environmental quality (EQ) in oil-producing and non-oil-producing
African countries from 1999 to 2017. The FMOLS findings demonstrate that IQ significantly promoted EG and improved EQ in the
non-oil-producing countries, however it only improved EQ and
showed no significant impact on EG in oil-producing countries.
FDI significantly promoted EG to a higher extent in oil-producing
countries than in non-oil-producing countries, but it presented no
significant impact on EQ in both groups. The VECM results reveal
that (i) two-way causation among IQ and EG, IQ and EQ, FDI and
EG, and FDI and EQ was occurred in both groups, in the long-run.
(ii) two-way causation among FDI and EQ and one-way causation
from FDI to EG was observed in non-oil-producing countries in
the short-run. Moreover, two-way causation among IQ and EG,
and one-way causation from IQ to EQ were observed in non-oilproducing countries. To realize the sustainable development of
economy and environment, a series of policy suggestions have
been discussed.
Keywords
African countries; economic growth; environmental quality; foreign direct investment; institutional quality; sustainable development
Hrčak ID:
302690
URI
Publication date:
31.3.2023.
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