Foreign Direct Investment, Clean Development Mechanism, and Environmental Management: A case of Sub-Saharan Africa

Abstract

This doctoral dissertation explores the contribution of environmental management practices,
\nthe so-called clean development mechanism (CDM) projects, and foreign direct investment
\n(FDI) in achieving sustainable development in developing countries, particularly in Sub-
\nSaharan Africa. Because the climate change caused by greenhouse gas emissions is one of
\nthe most serious global environmental challenges, the main focus is on the causal links
\nbetween carbon dioxide (CO2) emissions, energy consumption, and economic development
\nin Sub-Saharan Africa. In addition, the dissertation investigates the factors that have affected
\nthe distribution of CDM projects in developing countries and the relationships between FDI
\nand other macroeconomic variables of interest.
\nThe main contribution of the dissertation is empirical. One of the publications uses crosssectional
\ndata and Tobit and Poisson regressions. Three of the studies use time-series data
\nand vector autoregressive and vector error correction models, while two publications use
\npanel data and panel data estimation methods. One of the publications uses thus both timeseries
\nand panel data. The concept of Granger causality is utilized in four of the publications.
\nThe results indicate that there are significant differences in the Granger causality
\nrelationships between CO2 emissions, energy consumption, economic growth, and FDI in
\ndifferent countries. It appears also that the causality relationships change over time.
\nFurthermore, the results support the environmental Kuznets curve hypothesis but only for
\nsome of the countries. As to CDM activities, past emission levels, institutional quality, and
\nthe size of the host country appear to be among the significant determinants of the distribution
\nof CDM projects. FDI and exports are also found to be significant determinants of economic
\ngrowth.