Essays on inclusive growth and environmental quality: evidence from Sub-Saharan Africa

Abstract

Thesis (PhD)--Stellenbosch University, 2025.Jinapor, J. A. 2025. Essays on inclusive growth and environmental quality: evidence from Sub-Saharan Africa. Unpublished doctoral dissertation. Stellenbosch: Stellenbosch University [online]. Available: https://scholar.sun.ac.za/items/09c6a3d9-bdb3-4286-b69b-13d32bd5534aEconomic growth, defined as the increase in the production of goods and services over time, differs significantly from inclusive economic growth, which aims to ensure that the benefits of growth are equitably shared across society. While economic growth is crucial for social progress as outlined in Sustainable Development Goal (SDG) 8, inclusive growth targets broader objectives, including SDG 1 (poverty reduction), SDG 5 (gender equality), and SDG 10 (reduced inequalities). In sub-Saharan Africa (SSA), progress toward shared prosperity has been limited, with high levels of poverty, inequality, and unemployment persisting despite over two decades of economic growth. This indicates a lack of inclusivity in the region's development process and outcomes. Furthermore, inclusive economic growth must also be environmentally sustainable, meaning it should meet present growth needs without compromising the environmental resources that future generations will rely on. Environmental sustainability is now a central part of the global development agenda. This thesis identifies three major gaps in the literature that it aims to address. First, there is limited research on inclusive economic growth in SSA, particularly regarding the role of energy consumption and foreign direct investment (FDI). These factors are critical, as they can either drive or hinder inclusive growth depending on how they interact. Second, while stakeholders are increasingly aware of the environmental costs of economic expansion, there is a lack of research examining the relationship between FDI, industrialisation, and environmental quality. Additionally, the potential role of institutional quality in mitigating environmental harm from these variables has not been thoroughly explored. Third, SSA continues to suffer from severe energy deficits, largely due to low financial development and the inability to attract sufficient investment in the energy sector. The existing literature has not adequately explored how information and communication technology (ICT) and financial development interact to impact energy sufficiency, renewable energy consumption, and the broader energy transition in the region. This thesis contributes to the growing body of knowledge on how SSA can pursue multidimensional sustainability and inclusive growth in alignment with Africa’s Agenda 2063 and the United Nations (UN) Agenda 2030. However, the region faces significant constraints, including climate change vulnerability, limited financial and logistical capacity, and geopolitical instability. Using macro-level panel data from SSA countries between 2000 and 2019, the study presents empirical analyses across three main chapters. The first objective investigates the effects of FDI, energy consumption, and their interaction on inclusive economic growth using the two-stage system generalised method of moments (2SGMM). Results show that energy consumption promotes inclusive growth and that FDI has a non-linear relationship with it. FDI initially dampens growth but becomes beneficial beyond a certain point, especially when combined with renewable or non-renewable energy. The study encourages policymakers to attract FDI into renewable energy to support inclusive and sustainable development. The second objective examines the link between FDI, industrialisation, institutional quality, and environmental outcomes. Using the Driscoll and Kraay technique, findings reveal that FDI and industrialisation increase carbon emissions, but institutional quality helps mitigate this impact. The study supports the environmental Kuznets curve (EKC) hypothesis and urges stronger environmental institutions. The third objective explores how financial development and ICT influence energy security. Applying feasible generalised least squares (FGLS), Panel Correlated Standard Error (PCSE), and two-stage least squares (2SLS) techniques, the findings show positive impacts of financial development and ICT on renewable and non-renewable energy use. Their interaction further strengthens energy consumption, suggesting ICT-enhanced financial systems can support SSA’s energy transition.Doctora