Environmental quality and economic growth in Nigeria: A fractional cointegration analysis

Abstract

The paper investigates the relationship between environmental quality and economic growth in Nigeria using a fractional cointegration analysis over the period 1970-2011. It seeks to examine the effect of growth on environmental performance by controlling for the role of institutional quality, trade openness and population density. The paper found that early stages of development in Nigeria accentuate the level of environmental degradation. It also finds that weak institutions and unrestricted trade openness increase the extent of environmental degradation due to environmental dumping. Finally, the paper shows that a larger population density enhances the promptness of environmental abatement measures and consciousness for cleaner environment. The study, however, failed to attain a reasonable turning point and hence a non-existence of EKC in Nigeria. The paper recommends the need to restrict the importation of emission intensive products, check the activities of multinationals which invest in producing high CO2 emitting goods in LDCs and exports to home countries. Finally, there is need to strengthen institutional quality to ensure adoption of clean technologies as income rises.

Keywords

• Fractional cointegration
• Institutional quality
• Environmental degradatio