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The Dilemma of Minerals Dependent Economy: The case of Foreign Direct Investment and Pollution in Nigeria

Author

Listed:
  • Kingston, Kato Gogo

Abstract

This study empirically investigates the causal relationship between mineral exploration and environmental pollution in Nigeria with specific focus on natural gas and crude oil in Niger Delta region. The model of Granger causality tests was used. Quarterly data covering 2008 and 2009 were used in accordance with the Akaike (1976) minimum lag length for time-series analysis. The ADF unit root tests show that the null hypothesis of unit root is rejected and, the KPSS stationarity test result accepts the null hypothesis of "stationarity" implying that the variables are fit for the purpose of Granger causality analysis. The test for cointegration show that the variables are cointegrated at the trace level; this imply that gas flaring, environmental pollution and foreign direct investment are statistically linked. The regression on the ordinary least square illustrates that the impact of oil and natural gas exploration on the Nigerian environment is persistent in the long-run. The Granger-causality test result shows that there is one-way causality flowing from the flaring of gas by the foreign firms to the environmental pollution in Nigeria. The study finds a long-run uni-directional causal relationship flowing from mineral exploration to air, soil and water pollution.

Suggested Citation

  • Kingston, Kato Gogo, 2011. "The Dilemma of Minerals Dependent Economy: The case of Foreign Direct Investment and Pollution in Nigeria," MPRA Paper 28603, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:28603
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    File URL: https://mpra.ub.uni-muenchen.de/29046/2/MPRA_paper_29046.pdf
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    References listed on IDEAS

    as
    1. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
    2. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Economy; Nigeria; Mineral; Pollution; Africa; Environment;

    JEL classification:

    • D0 - Microeconomics - - General
    • K2 - Law and Economics - - Regulation and Business Law
    • F18 - International Economics - - Trade - - - Trade and Environment
    • K3 - Law and Economics - - Other Substantive Areas of Law
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • K1 - Law and Economics - - Basic Areas of Law
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior

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