Globalization has increased connections between countries mainly through trade and foreign direct investment (FDI). This study explores how trade and FDI affect environmental outcomes, with a focus on the role of institutional quality. Using data from 47 sub-Saharan African countries collected between 2005 and 2022, and applying advanced statistical methods, the study finds that FDI has a mixed but important impact on pollution. In contrast, more open trade tends to lessen environmental pressures. Strong institutions characterised by good governance, the rule of law, and low corruption increase the likelihood that trade and FDI can support sustainable development. Therefore, the study recommends that sub-Saharan African governments strengthen institutional reforms and support investments and trade policies that are environmentally responsible.

Keywords: Institutional quality, greenhouse gas, trade openness, pollution, and investment.