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Assessing the Moderating Effect of Institutional Quality on Economic Growth - Carbon Emission Nexus in Nigeria

Author

Listed:
  • Anne C. Maduka

    (Igbariam, Nigeria)

  • Stephen O. Ogwu

    (University of Nigeria, Nsukka, Nigeria)

  • Chukwunonso S. Ekesiobi

    (Igbariam, Nigeria)

Abstract

This study explores the relationship between economic growth and carbon dioxide and the moderating effect of institutional quality in Nigeria from 1990 to 2020, by employing long run and short run dynamic ARDL regression, quartile regression and granger causality test for the estimation. Utilizing CO2 per capita emissions, GDP per capita– a proxy for economic growth, capital stock (CAPSTK) – proxy for capital investment in Nigeria and Control of Corruption and Regulatory Quality (COC and RGQ) which represent the effective environmental regulations and laws put in place for the control and prevention of environmental degradation, the study found a significant cointegration between CO2 emissions and economic growth (lnGDP) in Nigeria. Furthermore, an N-shaped nexus exist between CO2 emissions and economic growth in the long run and short run instead of the inverted U-shape curve postulated by the EKC hypothesis. This was confirmed by both ARDL and quartile regression results. Similarly, InCAPSTK contributed significantly to the growth of CO2 emissions in Nigeria both in the long run and short run, although, the short run did so at 10% significant level. Contrary to expectations, control of corruption (COC), contributes significantly to CO2 emissions in the long run but when it interacts with income (InGDP×COC), it significantly contributes to the reduction of CO2 emissions. More so, Regulatory quality (RGQ) had no significant impact on CO2 emissions in Nigeria either in the long run or short run, even when it interacts with InGDP. This finding is further supported by the quartile regression outcomes and granger causality. The study therefore concludes that CO2 emissions - economic growth nexus in Nigeria assumes an N-shape both in the long run and short run. Based on the results, the study recommends that Government should pursue industrialization policy with sophisticated method of production that will bring about rapid economic progress and at the same time support environmental sustainability.

Suggested Citation

  • Anne C. Maduka & Stephen O. Ogwu & Chukwunonso S. Ekesiobi, 2022. "Assessing the Moderating Effect of Institutional Quality on Economic Growth - Carbon Emission Nexus in Nigeria," Working Papers of the African Governance and Development Institute. 22/023, African Governance and Development Institute..
    • Handle: RePEc:agd:wpaper:22/023
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    References listed on IDEAS

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    1. Derese Kebede Teklie & Mete Han YaÄŸmur, 2024. "Effect of Economic Growth on CO2 Emission in Africa: Do Financial Development and Globalization Matter?," International Journal of Energy Economics and Policy, Econjournals, vol. 14(1), pages 121-140, January.
    2. John Bbale Mayanja & Brian Arinaitwe & Ronald Kasaijja & John Mutenyo & Edward Damulira Sengonzi, 2024. "The Nexus Between Renewable Energy Consumption, Financial Development, and Trade Openness Based on Environmental Quality in Uganda: An Application of the ARDL," International Journal of Energy Economics and Policy, Econjournals, vol. 14(3), pages 711-718, May.
    3. Bekun, Festus Victor, 2024. "Race to carbon neutrality in South Africa: What role does environmental technological innovation play?," Applied Energy, Elsevier, vol. 354(PA).
    4. Magazzino, Cosimo & Drago, Carlo & Schneider, Nicolas, 2023. "Evidence of supply security and sustainability challenges in Nigeria’s power sector," Utilities Policy, Elsevier, vol. 82(C).
    5. Bruno Ibekilo & Chukwunonso Ekesiobi & Precious Muhammed Emmanuel, 2023. "Heterogeneous assessment of urbanisation, energy consumption and environmental pollution in Africa: the role of regulatory quality," Economic Change and Restructuring, Springer, vol. 56(6), pages 4421-4444, December.
    6. Umair Kashif & Junguo Shi & Snovia Naseem & Shanshan Dou & Zohaib Zahid, 2024. "ICT service exports and CO2 emissions in OECD countries: the moderating effect of regulatory quality," Economic Change and Restructuring, Springer, vol. 57(3), pages 1-17, June.
    7. Awan, Ashar & Alnour, Mohammed & Jahanger, Atif & Onwe, Joshua Chukwuma, 2022. "Do technological innovation and urbanization mitigate carbon dioxide emissions from the transport sector?," Technology in Society, Elsevier, vol. 71(C).
    8. Ullah, Assad & Dogan, Mesut & Pervaiz, Amber & Ather Bukhari, Azaz Ali & Akkus, Hilmi Tunahan & Dogan, Husna, 2024. "The impact of digitalization, technological and financial innovation on environmental quality in OECD countries: Investigation of N-shaped EKC hypothesis," Technology in Society, Elsevier, vol. 77(C).
    9. Nwachukwu Edwin Udochukwu, 2024. "Impact of Institutional Framework on Economic Growth of Nigeria (1996 to 2022)," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(1), pages 1185-1198, January.
    10. Bartosz Jóźwik & Samet Gürsoy & Mesut Doğan, 2023. "Nuclear Energy and Financial Development for a Clean Environment: Examining the N-Shaped Environmental Kuznets Curve Hypothesis in Top Nuclear Energy-Consuming Countries," Energies, MDPI, vol. 16(22), pages 1-14, November.

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    More about this item

    Keywords

    Regulatory Quality; Control of Corruption; Carbon Emission; Economic Growth; Quartile Regression; Environmental Sustainability;
    All these keywords.

    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling

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