The Effect of industrial dynamics on Carbon dioxide emissions in Africa’s manufacturing sector and the moderating role of industrial emissions policies

Abstract

Africa's manufacturing sector is a critical driver of economic growth but also a significant contributor to Carbon dioxide (CO2) emissions due to its reliance on energy-intensive processes and outdated technologies. Despite global efforts to promote efficiency and reduce emissions, limited research exists on the effect of industrial dynamics on CO2 emissions in Africa's manufacturing sector. This study addressed this by investigating the effect of manufacturing sector’s share of GDP, energy consumption efficiency and scientific innovations on CO2 emissions, with a specific focus on the moderating role of industrial emissions policies. The study adopted the Environmental Kuznets Curve (EKC) hypothesis and the Resource Curse theory as its theoretical frameworks. The study targeted manufacturing sectors in forty-seven (47) African countries. Data was sourced from the World Bank, United Nations Industrial Development Organization (UNIDO), and Climate Watch. A panel data regression model was used to analyze the relationship between the variables, with industrial emissions policies measured through industrial emissions intensity. Descriptive statistics revealed wide disparities in emissions and energy use, with concentrations in a few industrial hubs. Correlation analysis showed strong positive links between emissions, manufacturing output and emission intensity, while innovation was associated with higher emissions in the short run. Results from the Random Effects GLS model indicated that energy intensity and manufacturing share of GDP significantly reduce emissions, whereas innovation increases them, highlighting the need to align R&D with low-carbon objectives. Incorporating industrial emission intensity improved model fit, confirming its positive effect on emissions and emphasizing the importance of emission standards, energy efficiency programs and regional collaboration to decouple industrial growth from environmental degradation.

Key Words: Industrial Dynamics, Industrial Emissions Policies, Carbon Dioxide Emissions, Manufacturing Sector, Manufacturing sector’s share of GDP, Energy consumption efficiency, Scientific innovations.