Shadow economy and foreign direct investment in Nigerian manufacturing industry

Olowookere, Johnson Kolawole; Dada, James Temitope; Ajide, Folorunsho M.

doi:10.1504/ijebr.2021.10035378

Cited by 5 publications

(6 citation statements)

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“…In the literature, shadow economy [1] connotes all economic events or activities taking place outside the bureaucratic public and private sector establishments (Ihrig and Moe, 2004; Hart, 2008; Ajide et al , 2021). The activities may produce legal goods, but no operation is taking place within the regulatory environment (Ihrig and Moe, 2004).…”

Section: Overview Of Shadow Economy In Africamentioning

confidence: 99%

“…Third, this study examines the effect of shadow economy on environmental quality in Africa as a whole, with special focus on the role played by institutions in such link. As researched, Africa is one of the continents with highest number of shadow economy (ILO, 2010; Medina and Schneider, 2018; Ajide et al , 2021) and has also witnessed various deterioration in her environmental quality. Finally, the study uses three different robust variables to measure environmental pollution (carbon dioxide (CO 2 ) emissions per capita, methane emission and nitrous oxide emission) for sensitivity analysis.…”

Section: Introductionmentioning

confidence: 99%

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Shadow economy, institutions and environmental pollution: insights from Africa

Dada

Ajide

Sharimakin³

2021

WJSTSD

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PurposeThis study investigates the effect of shadow economy on environmental pollution and the role of institutional quality in moderating the impact in African countries between 1991 and 2015.Design/methodology/approachThe study employs three pollutant variables namely: carbon dioxide emissions per capita, methane emission and nitrous oxide emission as robustness check. Also, battery of methodologies; ordinary least squares, fixed effects and system generalised method of moments are used to drive out the conclusions of this study.FindingsThe findings reveal that shadow economy and institutional quality contribute significantly to environmental pollution in Africa. Further, the interactive effect of shadow economy and institutional quality worsens environmental quality in the region. This reveals that weak institutional quality recorded in the region increases the level of shadow economy, thereby intensifying environmental pollution.Practical implicationsThe study concludes that weak institutional framework in the region reinforces shadow economy and environmental pollution. Hence, findings from this study can help policymakers in the region to better understand the role of institutional quality in reducing shadow economy and environmental pollution.Originality/valueThis study enriches one’s understanding on the role of institutional quality in the relationship between environmental quality and shadow economy in African context. It investigates the direct and indirect impact of institutions and shadow economy on environmental quality. The study also uses three different robust variables to measure environmental pollution (carbon dioxide (CO2) emissions per capita, methane emission and nitrous oxide emission) for sensitivity analysis.

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Section: Overview Of Shadow Economy In Africamentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Shadow economy, institutions and environmental pollution: insights from Africa

Dada

Ajide

Sharimakin³

2021

WJSTSD

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“…According to the literature, there are two approaches for capturing shadow economy: direct and indirect approaches. The direct approach involves the use of survey method to gather relevant information at microlevel while the indirect approach involves using macroeconomic variables (Schneider and Buehn, 2018; Ajide et al , 2021). The main advantage of indirect approach is that it overcomes the problem encountered using a survey method based on the fact that individual respondents do not disclose the true picture of economic activities undertaking informally when filling questionnaires (Schneider and Enste, 2000).…”

Section: Literature Reviewmentioning

confidence: 99%

“…In Africa, there are studies that examine how shadow economy relates with socioeconomic variables. For instance, the recent study of Ajide et al (2021) examines the symmetric and asymmetric impact of shadow economy on foreign direct investment (FDI) in the manufacturing sector of Nigeria over a period of 1975–2017. They conclude that shadow economy attracts new entrants into the industry in the long run while the reverse is the case in the short run.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The level of this pollution exceeds the average pollution in sub-Saharan African (72%), and the air pollution damage costs about 1% of postgross national income (Parke, 2016). In addition, Figure 1 shows that the average size of shadow economy in Africa is about 38% of gross domestic product (GDP) between 2010 and 2014, while the size of shadow economy in Nigeria is above 50% on average (Allard, 2017; Ajide et al , 2021).…”

Section: Introductionmentioning

confidence: 99%

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The moderating role of institutional quality in shadow economy–pollution nexus in Nigeria

Dada

Ajide

2021

MEQ

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PurposeThis study examines the moderating role institutional quality plays in shadow economy–environmental pollution nexus in Nigeria between 1984 and 2018. Further, the study also determines the threshold level of institutional quality that lessens shadow economy and abates environmental pollution.Design/methodology/approachShadow economy is measured as a percentage of gross domestic product (GDP) using the currency demand approach while environmental pollution is proxy by carbon dioxide (CO2) per capita. Autoregressive distributed lag (ARDL) is used as the estimation technique.FindingsResults from the study show that shadow economy has a positive and significant effect on environmental pollution both in the short and long run, while institutional quality has a negative effect on environmental pollution. This reveals that shadow economy worsens environmental quality while institutional quality abates environmental pollution. The interactive term of shadow economy with institutional quality has a negative but insignificant effect on environmental pollution in the long run. It implies that institutional quality is weak to bring about significant reduction in shadow economy and environmental pollution. Further, the threshold level of institutional quality required to lessen the effect of shadow economy and abate environmental pollution is found to be 5.69 on an ordinal scale of 0–10.Practical implicationsInstitutional quality in Nigeria is weak and needs to be strengthened up to the threshold level in order to effectively moderate the impact of shadow economy on environmental pollution.Originality/valueThe study addresses the perceived gap in the empirical literature on the emerging role of strong institution in abating environmental pollution in Nigeria. It also develops a threshold level of institutional quality capable of mediating the negative impact of shadow economy on environmental pollution. This empirical contribution is largely missing in the context of Nigeria.

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The moderating effect of institutions in foreign direct investment led growth hypothesis in Nigeria

Dada

Abanikanda

2021

Econ Change Restruct

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Shadow economy and foreign direct investment in Nigerian manufacturing industry

Cited by 5 publications

References 0 publications

Shadow economy, institutions and environmental pollution: insights from Africa

Shadow economy, institutions and environmental pollution: insights from Africa

The moderating role of institutional quality in shadow economy–pollution nexus in Nigeria

The moderating effect of institutions in foreign direct investment led growth hypothesis in Nigeria

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