DOES TRADE LIBERALIZATION AND FOREIGN DIRECT INVESTMENT INDUCE ENVIRONMENTAL DEGRADATION IN SELECTED WEST AFRICAN SUB-REGIONS?

Abstract

This study examined the effect of trade liberalization and foreign direct investment on environmental degradation within the selected West African sub-region. The data employed in analyzing the result covers the period 1996 to 2022. Fully modified ordinary least squares and dynamic ordinary least squares were employed in estimating the models. The study's findings indicate a negative and insignificant influence of trade liberalization and foreign direct investment on environmental degradation, indicating that trade liberalization and foreign direct investment reduced environmental degradation. Again, the interaction of trade liberalization and foreign direct investment reduced environmental degradation. Other results confirmed that fossil fuel energy consumption positively enhanced environmental degradation, although renewable energy consumption significantly reduced pollution. Based on the empirical findings, since trade liberalization and foreign direct investment reduce environmental degradation as fossil fuel energy consumption increase environmental degradation, implies that ECOWAS governments institute environmental laws following the race to the top theory to discourage fossil fuel energy usage and push for more renewable energy as it reduces incessant pollution within the region.