Asymmetric Nexus Between Industrial Production and Carbon Emissions: Empirics from Sub-Saharan Africa

Abstract

While previous panel studies have focused on the linear specifications of the industrial production-carbon emissions nexus, nonlinear panel studies on this relationship remain thin on the ground. This article examines the asymmetric nexus between industrial production and carbon emissions in 30 selected Sub-Saharan African countries spanning from 1990 to 2019. In the presence of cross-sectional dependence, the second-generation unit root tests were applied to examine the unit-root properties. The cointegration tests results confirm the presence of a long-run relationship among the variables. Finally, we employed the panel nonlinear autoregressive distributed lag approach to estimate the coefficient values. Generally, the empirical findings demonstrate that industrial production asymmetrically influences carbon emissions both in the short and long-runs. Specifically, the long-run estimates indicate that a positive shock in industrial production of 1% induces an increase in carbon emissions by 0.213%, while a negative shock induces a 0.390% decrease in carbon emissions. Based on these results, there is a need for policymakers in the selected Sub-Saharan African countries to consider the asymmetric behavior of industrial production while formulating industrialization policies. These policies should also be based on the condition of adopting green technology forms of energy. JEL Classification O14, Q5, Q54