How does Eco-Innovation Affect CO2 Emissions? Evidence from Sub-Saharan Africa

Abstract

Accurate implementation of eco-innovation in Sub-Saharan Africa (SSA) to mitigate climate change and related environmental turmoil emanating from economic activities is always ignored. The study seeks to investigate the role of eco-innovation in enhancing environmental sustainability; the effect of eco-innovation on carbon dioxide (CO[Formula: see text] emissions for the aggregated Sub-Saharan Africa panel of 35 countries and low-income and middle-income countries sub-panels over the period 1990–2017 is investigated. Bearing in mind the potential occurrence of residual cross-sectional reliance and heterogeneity, this extant study employed second-generation estimation approaches which include the cross-sectional Im, Pesaran and Shin and the cross-sectional augmented Dickey–Fuller unit root tests together with the Westerlund and Edgerton as well as the Durbin–Hausman panel cointegration tests. The augmented mean group long-run estimation method was finally employed to estimate the long-run liaison amid variables. Based on the outlined robust approaches, the main outcomes are elaborated as follows: (i) eco-innovation significantly reduces environmental pollution in all the panels Sub-Saharan Africa; (ii) income is revealed to have insignificant effect on environmental pollution across all panels, although a positive effect occurred in both the middle-income panel and aggregated panel, whereas an adverse effect is noted in the low-income panel of SSA nations; (iii) energy consumption and urbanisation contribute to environmental pollution in all the panels; (iv) trade openness contributes significantly to environmental pollution in the SSA aggregated panel but has insignificant effect in the sub-panels; and (v) foreign direct investment has no effect on carbon emissions among all panels. The findings also reveal invalid environmental Kuznets curve hypothesis in the various country groups. Based on the findings, we recommend a solid policy framework for investments in more innovation activities that facilitate sustainability transition, prioritise green investments, reduce the importation of emissions-intensive technologies and encourage green production processes which in turn could guarantee sustainable development.