Nexus between foreign direct investments, shadow economy and CO2 emissions in Nigeria
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Abstract
As climate change continue to threat human survival especially in developing countries like Nigeria, identifying the major factors responsible for influencing CO2 emissions is paramount. This study therefore aimed at examining the impact of foreign direct investment and shadow economy on CO2 emissions in Nigeria. We used annual time series data for the period of 1998-2022 and deployed Autogressive Distributed Lag (ARDL) technique to analyze the phenomenon. After identifying the time-series properties of the data, the variables in the model are found to have a long run association. The empirical provide the validity of pollution halo hypothesis implying that FDI reduce environment pressure by lowering carbon emissions in the country in long. Equally, the results provide evidence that shadow economy reduce CO2 emissions while the Toda and Yamamoto causality test results showed the existence of unidirectional relationship between shadow economy and CO2 emissions and neutral causality between FDI and CO2.
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