Foreign Direct Investment, Domestic Investment and Green Growth in Nigeria: Any Spillovers?
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Date
2019-01
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Abstract
Globally, investments in physical and human capital have been identified to foster real economic
growth and development in any economy. Investments, which could be domestic or foreign, have
been established in the literature as either complements or substitutes in varying scenarios. While
domestic investments bring about endogenous growth processes, foreign investment, though may
be exogenous to growth, has been identified to bring about productivity and ecological spillovers. In view of these competing–conflicting perspectives, this chapter examines the
differential impacts of domestic and foreign investments on green growth in Nigeria during the
period 1970-2017. The empirical evidence is based on Auto-regressive Distributed Lag (ARDL)
and Granger causality estimates. Also, the study articulates the prospects for growth
sustainability via domestic or foreign investments in Nigeria. The results show that domestic
investment increases CO2 emissions in the short run while foreign investment decreases CO2
emissions in the long run. When the dataset is decomposed into three sub-samples in the light of
cycles of investments within the trend analysis, findings of the third sub-sample (i.e. 2001-2017)
reveal that both types of investments decrease CO2 emissions in the long run while only
domestic investment has a negative effect on CO2 emissions in the short run. This study
therefore concludes that as short-run distortions even out in the long-run, FDI and domestic
investments has prospects for sustainable development in Nigeria through green growth.
Description
p.1-31
Keywords
Sustainability, Productivity, Growth