FOREIGN DIRECT INVESTMENT AND CARBON EMISSION IN NIGERIA: A TEST OF POLLUTION HAVEN AND POLLUTION HALO HYPOTHESIS
Aigbovo, Omoruy and Faith Evbayoboru Idehen
Volume 4 Issue 2
Abstract
The study inquiries into the effect of foreign direct investment (FDI) on carbon emission in Nigeria in order to validate or invalidate the pollution haven hypothesis and the pollution halo hypothesis in Nigeria. Time series data on Carbon emission, FDI, Economic growth, financial development, trade openness and urbanization from 1981 – 2022 were analyzed using descriptive statistics, correlation analysis and OLS regression techniques. With CO2 emission as the dependent variable, we estimate regression estimate of the model. Overall, findings from the study seem not to provide evidence that validates the pollution haven hypothesis or the pollution halo hypothesis. Also, trade openness was found not to be a key factor that significantly influences carbon emission in Nigeria while economic growth, financial development and urbanization stimulate CO2 emission in Nigeria. The study recommends that the Nigeria government should come up with policies that promote FDI inflows in Nigeria. Furthermore, Nigeria government should continue to drive economic growth using environmentally friendly policies as this will continue to lower the CO2 emission in Nigeria. Furthermore, banks must ensure that given credit should have a policy on how they will ensure that their activity does not harm the environment. Also, policymakers should strive to slow down the rate of urbanization in other to reduce its detrimental effect on the environment in Nigeria. Keywords: Carbon Emission, Foreign Direct Investment, Financial Development, Pollution Haven Hypothesis, Pollution Halo Hypothesis
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