POLLUTANT EMISSIONS, INSTITUTIONS AND ECONOMIC GROWTH IN NIGERIA

I.O. Bankefa ¹*, P. A. Olomola², O. P. Olofin³ & M.O. Fatai⁴

¹Subank Advanced Global Services Limited, Lagos State, Nigeria
²Department of Economics, Obafemi Awolowo University, Ile Ile, Osun state, Nigeria
³Department of Economics, Obafemi Awolowo University, Ile Ile, Osun state, Nigeria
⁴Department of Economics, Obafemi Awolowo University, Ile Ile, Osun state, Nigeria
*Correspondence Author’s E-Mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Abstract

The literature shows that to minimize the adverse effects of pollution on economic growth, the appropriate institutions must be put in place. While this is a plausible explanation, there are few evidences to confirm this assertion. This paper examined the dynamic effect of pollutant emissions and institutions on economic growth in Nigeria. Secondary data for the period of 1980-2015 were used and the data were sourced from the World Bank Development Indicators (WDI) and the Central Bank of Nigeria (CBN) Statistical Bulletins. VECM based impulse response and variance decomposition were used to analyze the data and estimate the model built for the paper. The results showed that democratic accountability (DA) has a positive (but not statistically significant) impact on economic growth while CO2 emissions have a negative and statistically significant impact on economic growth in Nigeria. The results also showed that institutions (although not statistically significant) cannot be overlooked in the growth process as far as Nigeria is concerned. Similarly, the impulse response function showed that a shock to CO2 emission would produce no immediate effect on economic growth but its effect in the medium term was negative before responding positively in the long run. In the same way, a shock to DA produced no immediate effect on economic growth but its effect in the medium term was negative with a significant negative response in the long run. The study concluded that a strong and efficient institution is needed to reduce the negative effect of CO2 emission on economic growth in Nigeria.

Key Words: VECM, institutions, Nigeria, growth, pollutions

POLLUTANT EMISSIONS, INSTITUTIONS AND ECONOMIC GROWTH IN NIGERIA