Foreign direct investment (FDI), economic growth and CO2 (Carbon Dioxide) emissions in Nigeria (1971-2013)
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Date
2015
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Economics,Obafemi Awolowo University
Abstract
The study examined the trend and patterns of foreign direct investment, economic growth and CO2 emissions in Nigeria; investigated the existence of non-linear relationships among foreign direct investment, economic growth and CO2 emissions in Nigeria; and determined the causality among foreign direct investment, economic growth and CO2 emissions in Nigeria. These were with the view to determining the relationship between foreign direct investments, economic growth and CO2 emissions in Nigeria for the period 1971 to 2013.
Secondary data were used for the study. Annual data on foreign direct investment, gross domestic product per capita growth, CO2 emissions and energy consumption covering the period 1971 to 2013 were sourced from the World Development Indicators (WDI) of the World Bank online database, 2014. Data collected were analysed using descriptive statistics such as tables and graphs; econometrics techniques such as autoregressive distributed lag (ARDL) with bounds testing modelling approach and the VECM Granger causality technique.
The result showed that an inverse pattern appears to emerge in the movement of foreign direct investment and economic growth; foreign direct investment and CO2 emissions; and a direct pattern appears to emerge in the movement of economic growth and CO2 emissions in Nigeria for the period 1971 to 2013. The results also showed non-linear relationships among the variables, judging by the signs of the coefficients of GDP per capita growth and foreign direct investment and their squared. The empirical result indicated that in the long run, there is an inverted u-shape relationship between economic growth and CO2 emissions; and a u-shape relationship between foreign direct investment and CO2 emissions. The inverted u-shape implies that CO2 emissions would tend to increase is in the early stages of development, and decreases once a threshold GDP per capita is reached. The u-shape implies that initially, an increase in foreign direct investment decreases CO2 emissions, after reaching a certain level, foreign direct investment increases CO2 emissions. However, the support for the non-linear relationships tends to be very weak when they are subjected to a priori expectations (statistically significant coefficients); GDP per capita growth (t = 0.42, p > 0.05), GDP per capita growth squared (t = -1.08, p > 0.05), foreign direct investment (t = 0.63, p > 0.05) and foreign direct investment squared (t = 0.56, p > 0.05). It is therefore reasonable to conclude that foreign direct investment and economic growth are not significant variables in determining the dynamics of CO2 emissions in Nigeria. We only find a statistically significant positive impact of energy consumption (t = 8.39, p < 0.05) on CO2 emissions in Nigeria during 1971 to 2013. In addition, result showed a unidirectional Granger strong causality running from energy consumption to CO2 emissions and from CO2 emissions to foreign direct investment; this is an evidence of pollution haven hypothesis.
The study concluded that CO2 emissions in Nigeria are not driven by foreign direct investment and economic growth; rather, it is largely influenced by energy consumption.
Description
xii,87p
Keywords
Emmissions, Energy consumption, Economic growth, Foreign direct investment
Citation
Ogunjumo,R.A(2015). Foreign direct investment (FDI), economic growth and CO2 (Carbon Dioxide) emissions in Nigeria (1971-2013). Obafemi Awolowo University