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AEC 2012 - Trade and Environmental Sustainability in Africa Do Institutions Matter

16-Oct-2012

This paper examines the impact of trade and political institutions on environmental sustainability in Africa and explores whether political institutions matter to the trade-environment relationship. We use data from a large group of African countries, covering the period 1990-2008 and two indicators of environmental sustainability: net forest depletion and CO2 emissions. The results from GMM-SYS estimates suggest that political institutions influence the relationship between trade and environmental sustainability only in the case of CO2 emissions. Interestingly, we find that polity has a U relationship with net forest depletion. In addition, the results are in favor of an environmental Kuznets curve in the case of pollution (CO2 emissions) but not in the case of net forest depletion (deforestation). We discuss the policy implications of these findings.

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