Trade Facilitation, Institutional Quality, and Sustainable Environment: Renewed Evidence from Sub-Saharan African Countries

This study examines the impact of trade facilitation and institutions on sustainable environment on a panel of 41 Sub-Saharan African countries over the period 2005-2014. Six composite indicators of trade facilitation (namely: export costs, import costs, export documents, import documents, export time, and import time) with a composite index (TFindex) are employed on four indicators of environmental sustainability (viz; natural resource depletion, net forest depletion, biocapacity, and ecological footprint of consumption) together with their combined index (Envindex) using the System Generalized Method of Moments. The following findings are established: first, the indicators of TF are significant and positively correlated with environmental sustainability (ES). Second, institutional quality dampens ES for the most part of the models. Third, the adverse effects of TF measures, institutional quality, and their interactive terms seem more severe from consumption angle than production, thus suggesting that the sources of environmental pollutants are more consumption oriented than production. What is more, Environmental Kuznets Curve Thesis finds a further empirical support. Going forward, the need for a well-harmonized trade facilitation procedure within a sound institutional environment, supported by a well-implemented national environmental protection law hold the promising key to addressing the prevailing environmental issues in the continent.

Automated summary

This study examines the impact of trade facilitation and institutions on sustainable environment in Sub-Saharan African countries. The findings show that trade facilitation indicators are positively correlated with environmental sustainability, while institutional quality weakens it. In addition, the adverse effects of trade facilitation measures and institutional quality are more severe from the consumption angle than production. Therefore, establishing a well-harmonized trade facilitation procedure, supported by a sound institutional environment and a well-implemented national environmental protection law, is key to addressing the environmental issues in Africa.