Assessing the moderating effect of institutional quality on economic growth—carbon emission nexus in Nigeria

Abstract

This study explores the relationship between economic growth and carbon dioxide and the moderating effect of institutional quality in Nigeria from 1990 to 2020, by employing long-run and short-run dynamic ARDL regression, quartile regression and Granger causality test for the estimation. Utilizing CO 2 per capita emissions; GDP per capita, a proxy for economic growth; capital stock (CAPSTK), proxy for capital investment in Nigeria and control of corruption and regulatory quality (COC and RGQ) which represent the effective environmental regulations and laws put in place for the control and prevention of environmental degradation, the study found a significant cointegration between CO 2 emissions and economic growth (lnGDP) in Nigeria. Furthermore, an N-shaped nexus exists between CO 2 emissions and economic growth in the long-run and short-run instead of the inverted U-shape curve postulated by the EKC hypothesis. This was confirmed by both ARDL and quartile regression results. Similarly, InCAPSTK contributed significantly to the growth of CO 2 emissions in Nigeria both in the long run and short run; although, the short run did so at 10% significant level. Contrary to expectations, control of corruption (COC) contributes significantly to CO 2 emissions in the long run, but when it interacts with income (InGDP COC), it significantly contributes to the reduction of CO 2 emissions. More so, regulatory quality (RGQ) had no significant impact on CO 2 emissions in Nigeria either in the long run or short run, even when it interacts with InGDP. This finding is further supported by the quartile regression outcomes and Granger causality. The study therefore concludes that CO 2 emissions–economic growth nexus in Nigeria assumes an N-shape both in the long run and short run. Based on the results, the study recommends that Government should pursue industrialisation policy with sophisticated method of production that will bring about rapid economic progress and at the same time support environmental sustainability.

Modelling International Trade, Foreign Direct Investment, and Carbon Emission Nexus in Nigeria: A Reconsideration of the Pollution Haven Hypothesis

“…and I(1)). However, the appropriateness of the approach when variables are integrated with mixed orders must not exceed I(1) (Pesaran et al, 2001;Dimwobi et al, 2022b;Maduka et al, 2022).…”

“…Accordingly, when economies get prosperous, they become ecologically sensitive and pay attention to the kind of investments they make. (Ajide and Mesagan, 2022;Maduka et al, 2022). On the other hand, the PHH posits that developed economies take advantage of the developing nations with environmental regulation laxity by trading and relocating pollution-laden investments to those nations because it is perceived to be cheap to operate in nations with less stringent environmental regulatory quality (Birdsall & Wheeler, 1993;Taylor, 2005;Jbara & Brian, 2007;Gill et al, 2020).…”

“…First, the country's profile in terms of our major research interests (international trade, FDI, and CO2 emissions) is very compelling. Nigeria accounts for over 73 percent of trade and commerce between "Economic Community of West African States (ECOWAS)" countries (Ekesiobi et al, 2011;Oguanobi et al, 2016;Ekesiobi and Dimnwobi, 2021;Okafor et al, 2021), Economist, 2018), Nigeria stands out as a conspicuous outlier that has witnessed a steady increase in anthropogenic GHG emission since the beginning of the century (Maduka et al, 2022). Nigeria, Dimnwobi et al, 2017;Ude and Ekesiobi, 2015).…”

“…Thus, despite its promising economic and demographic position in Africa, Nigeria faces regulatory obstacles that may affect the validity or lack thereof of the PHH in the nation (Ekesiobi et al, 2015;Mobosi et al, 2017). These obstacles include bottlenecks in the passing of government legislation, protectionist trade policies, an unstable regulatory ecosystem, a sluggish and incompetent judicial system, undependable conflict resolution systems, insecurity, and rampant corruption (Hang et al, 2022;Maduka et al, 2022;Mobosi et al, 2017). Fourth, the study will confirm whether or not a nation's regulatory system directly affects how FDI and trade operations may or may not have an environmental impact.…”

Linking shadow economy and CO2 emissions in Nigeria: Exploring the role of financial development and stock market performance. Fresh insight from the novel dynamic ARDL simulation and spectral causality approach

“…According to the World Bank (2021), even though Nigeria and six other nations generate 40% of global oil supply, they are also responsible for roughly two-thirds (65%) of the gas flared globally over the previous 9 years. According to Maduka et al (2022), this ranks Nigeria as one of the top emitters in the world. As a result, pollution research is still essential for fostering green growth in Nigeria.…”