Analyzing the environmental Kuznets and Philips curves in Europe and African regions: Determining the role of Chinese FDI, institutional qualities, and access to electricity

In the last few years, the link between economic growth and energy-led pollution has attracted the attention of many academics and researchers who are now exploring the potential avenue for a sustainable future. In light, the current study empirically assesses the effect of access to electricity (AEC), unemployment (UNE), institutional qualities (IQ) proxied by (control of corruption (CC) and regulatory quality (RQ)) and Chinese foreign direct investment (CnFDI) on the ecological footprint (EF) of the sample of 27 Europe and 31 African nations that are part of OBOR (one belt, one road) initiatives. The study links the hypothetical framework of the EKC and environmental Philp's curve (EPC), inducing (CnFDI-stock), UNE, and energy poverty. The long-run empirical results confirmed an inverted U-shaped link between income per capita and EF by confirming the EKC hypothesis. Empirical findings further exposed that a 1 % upsurge in UNE level declines EF by -0.350 % to 0.570 % in the African region, thus validating the EPC, while AEC increases EF by 0.150 % to 0.240 %. Further, CnFDI has a determinantal effect, as an increase in CnFDI rises EF by 0.271 % to 0.324 % in Europe and 0.317 % to 0.409 % in Africa, thus aligning with the pollution haven hypothesis. Finally, CC and RQ are both negative and significant factors in Europe, while CC is negative and RQ is a positive factor in Africa. Remarkably, the interaction impact of CnFDI with indicators of IQ bears significant favorable outcomes only in Europe, which implies that solid institutions can increase the environment's quality (EQ) by attracting FDI. The results are also checked and validated by utilizing CO2 as an additional proxy for EQ as a robustness check. These findings recommend that the authorities of these nations focus on enticing clean FDI and increasing the AEC and strong institutions to guard the environment and guarantee sustainable future development.