Industrialization and environmental sustainability in Uganda (1993-2023)

Abstract

This study examines the impact of industrialization on environmental sustainability in Uganda over the period 1993-2023, a time marked by steady economic transformation and growing environmental pressures. Guided by an industrialization-augmented Environmental Kuznets Curve (EKC) framework, the study employs the Autoregressive Distributed Lag (ARDL) model to explore both the linear and non-linear effects of industrial activity on environmental quality, proxied by per capita CO2 emissions. The analysis further incorporates key macroeconomic and structural controls, including real GDP per capita, services value added, trade openness, and primary school enrolment. The empirical results show that industrialization significantly increases carbon emissions in the short run, reflecting the carbon-intensive nature of Uganda’s manufacturing sector. In the long run, the squared term of industrialization is negative and statistically significant, indicating the presence of an industrialization-EKC relationship in which emissions rise during early industrial growth but decline after a certain threshold of industrial development is reached. Among the control variables, trade openness and real GDP per capita tend to heighten emissions, while expansion in the services sector and improvements in education contribute to environmental quality. The error-correction term is native and highly significant, confirming a stable long-run equilibrium and rapid adjustment of emissions to shock. Overall, the findings highlight the dual challenge of pursuing industrialization while maintaining environmental sustainability. Policy responses should prioritize cleaner industrial technologies, stricter enforcement of environmental standards, green-oriented educational initiatives, and greater support for the expansion of low-emission service activities. These measures are essential for ensuring that Uganda’s industrialization pathway supports both economic transformation and long-term environmental protection. Keywords: Industrialization; environmental sustainability; ARDL; ECM; Uganda.