Urbanization and CO₂ emissions in sub-Saharan African countries: The moderating role of foreign direct investment

This work studies the relationship between urbanization and carbon dioxide emissions in Sub-Saharan African countries from 1990 to 2022. In order to do so, we employ second-generation panel regression that relates carbon dioxide emissions, urbanization, gross domestic product per capita, energy consumption, human capital, and foreign direct investment. These models, Driscoll-Kraay and two-stage least squares (2SLS), pay attention to slope coefficients and cross-sectional dependence to estimate the variables’ parameters. The results show that urbanization and human capital have positive and significant effects on carbon dioxide emissions. In contrast, the effect of foreign direct investment is negative and significant. The results also show that foreign direct investment mitigates the positive impact of urbanization and human capital on carbon dioxide emissions. A discussion of the policy implications of these results is provided in this study. © 2025 Elsevier Inc. All rights are reserved, including those for text and data mining, AI training, and similar technologies.