Environmental Quality and Growth Effects of Foreign Direct Investment in Nigeria

Abstract The study examines the growth effects of foreign direct investment on environmental quality in Nigeria between ۱۹۷۰ and ۲۰۱۳. 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 ۶۷.۴% 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.

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Keywords: Environment , economic growth , threshold , Foreign direct investment , Nigeria. JEL Classification: F۱۸ , F۲۱ , O۱۲