Environmental Quality and Growth Effects of Foreign Direct Investment in Nigeria

Iran. Econ. Rev. Vol. 20, No. 2, pp. 125-140, 2016

16 Pages Posted: 6 Dec 2016

Date Written: June 6, 2016

Abstract

The study examines the growth effects of foreign direct investment on environmental quality in Nigeria between 1970 and 2013. Variables like per capita income, environmental degradation, foreign direct investment, human capital, inflation, trade openness, interest rate, and the interaction term between foreign direct investment and carbon emission were employed in the study. A long run relationship was observed among the variables and foreign direct investment and environmental degradation negatively enhanced growth individually, while the interaction variable positively enhanced economic growth. The study concludes that environmental consideration does not really matter in growth consideration in Nigeria but that carbon emission must not exceed the 67.4% threshold if the economy is to benefit from the interaction between foreign direct investment and carbon emission. Policy makers are encouraged to strike a balance between the quantity of emissions and the amount of economic growth that is suitable for the country since the decision to maintain green growth by developing countries is not an easy one to make.

Keywords: Environment, Economic Growth, Threshold, Foreign Direct Investment, Nigeria

JEL Classification: F18, F21, O12.

Suggested Citation

Saibu, Olufemi Muibi and Mesagan, Ekundayo Peter, Environmental Quality and Growth Effects of Foreign Direct Investment in Nigeria (June 6, 2016). Iran. Econ. Rev. Vol. 20, No. 2, pp. 125-140, 2016, Available at SSRN: https://ssrn.com/abstract=2871765

Olufemi Muibi Saibu

Obafemi Awolowo University ( email )

P.M.B 13
Ile Ife
Ile-Ife, Osun 230001
Nigeria

Ekundayo Peter Mesagan (Contact Author)

University of Lagos ( email )

Akoka
Yaba
Lagos, LA Lagos state 234
Nigeria
+2348034820639 (Phone)

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