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Environmental performance in the West African economy: MM-quantile and 2SLS approach

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Musibau, HO, Yanotti, MB ORCID: 0000-0001-9797-9582, Vespignani, JL ORCID: 0000-0003-0265-4377 and Nepal, R ORCID: 0000-0001-9378-6206 2021 , Environmental performance in the West African economy: MM-quantile and 2SLS approach.

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Abstract

The 2019 World Bank report on West Africa's coast indicates that over $3.8 billion is lost annually due
to environmental issues, like erosion, flooding, and pollution. In this paper, the newly introduced
environmental performance index (EPI) is incorporate into the neoclassical growth model to empirically
address the impact of environmental performance on economic growth for the Economic Community
of West African States (ECOWAS). Using the novel Method of Moments-Quantile Regression
methodology and 2SLS models, the empirical investigation finds a positive relationship between
environmental performance and economic growth across quantiles for ECOWAS. Empirical results
provide evidence supporting bidirectional relationship running from environmental performance to
economic growth; from government size to economic growth; and from trade openness to economic
growth across all quantiles. Results show that environmental performance, government size, labour,
and capital stock have a positive impact on West African Economic Growth, while trade openness
decreases economic growth. We find a 48% optimal threshold of environmental performance index
(EPI) on economic Growth for ECOWAS countries. Based on the findings, policies to encourage
improved environmental performance above the threshold estimated will go a long way to enhance
West African economies.

Item Type: Report (Discussion Paper)
Authors/Creators:Musibau, HO and Yanotti, MB and Vespignani, JL and Nepal, R
Keywords: economic growth, environmental performance, ECOWAS, Moment of Method-QR estimator
Publisher: University of Tasmania
Copyright Information:

Copyright 2021 University of Tasmania

Additional Information:

Discussion Paper Series N 2021-05
JEL Classification: F43, F64, C31

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