Modelling the Emissions-income Relationship in East African Community (EAC) Countries: A Panel Cointegration Approach
Modelling the Emissions-income Relationship in East African Community (EAC) Countries: A Panel Cointegration Approach

Summary/Abstract: This study examines the nexus between economic growth and carbon dioxide (CO2 ) emissions in East African Community (EAC) countries, with a focus on the role of renewable energy consumption. As EAC countries undergo rapid industrialisation and urbanisation, understanding the impact of economic growth on emissions is critical for shaping sustainable development policies. Using a panel cointegration approach, the study applies the environmental Kuznets curve (EKC) hypothesis to data from six EAC countries, namely, the Democratic Republic of the Congo, Burundi, Rwanda, Kenya, Uganda and Tanzania, for the period from 1990 to 2022. The panel autoregressive distributed lag (ARDL) model is employed, with the pooled mean group (PMG) estimator used to analyse both long-run and short-run dynamics. The results reveal a U-shaped relationship between economic growth and CO2 emissions, challenging the traditional inverted U-shaped EKC hypothesis. The findings suggest that while the early stages of economic growth reduce emissions, emissions begin to rise again beyond a certain income threshold, indicating a potential overdevelopment phase. Renewable energy consumption is found to significantly reduce CO2 emissions; however, its economic benefits are constrained by infrastructural and policy challenges. This study contributes to existing literature by integrating renewable energy into the EKC framework and offers valuable insights for policymakers seeking to balance economic growth with environmental sustainability. The findings emphasise the need for targeted policies to promote clean energy adoption, low-carbon industrialisation and stronger environmental governance across EAC countries.

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