Effects of Foreign Direct Investment on Environmental Pollution in West Africa
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Abstract
West African countries face a dual challenge of fostering economic growth while addressing rising environmental pollution. This study examined how foreign direct investment affects environmental pollution in West Africa, using panel data from 16 countries in the region spanning 1996 to 2022. The variables included in the analysis were ecological footprint (as an indicator of environmental pollution), net inflows of foreign direct investment in current US dollars, renewable energy consumption, and urbanization. The data were analyzed using a panel autoregressive distributed lag (ARDL) model. The findings indicate that foreign direct investment leads to increased environmental pollution in both the short-term and long-term. This outcome supports the pollution haven hypothesis in the context of West Africa. Based on these results, it is recommended that policymakers enhance monitoring and enforcement of environmental regulations. It is crucial to strike a balance between promoting foreign direct investment and ensuring environmental sustainability in West Africa
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