The role of economic institutions in electricity consumption, economic growth, and CO₂ emissions linkages: Evidence from sub-Saharan Africa

Achieving energy efficiency and economic growth while reducing carbon emissions has been the policy goal of most economies. The role of economic institutions in economic growth has increasingly attracted scholarly attention; the extent to which economic institutions are shaping the global move toward sustainable energy consumption and carbon emissions mitigation has received less attention in the literature. This study investigates the relationship between economic institutions, electricity, carbon emissions, and economic growth for 45 sub-Saharan Africa countries over the period 1960-2017. Using system GMM-PVAR, economic growth causes economic institutions and carbon emissions without feedback effect while no causal relationship exists between electricity consumption and economic growth. Electricity consumption unidirectionally causes carbon emissions while no causal relationship exists between electricity consumption and economic institutions. The estimated coefficients show that economic growth increases economic institutions by 0.783% while reducing carbon emissions by 0.49%. Electricity consumption increases carbon emissions by 0.141% while economic institutions reduce carbon emissions by 0.054%. These results differ across regions within sub-Saharan Africa. These findings have several implications for sustainable development policy.