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Climate change, technology and manufacturing sector growth in oil-rich Nigeria

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Victoria Foye at University of Ibadan
Victoria Foye
Oluwasegun Olawale Benjamin at Lightway Research and Technology Centre
Oluwasegun Olawale Benjamin
  • Lightway Research and Technology Centre
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Abstract

This paper analyses the dynamic relationship between climate change, technology and manufacturing sector growth in Nigeria from 1970-2016 using climate augmented Mankiw-Romer-Weil theory within a structural vector autoregressive (SVAR) model. Restrictions are imposed accordingly, and the results reveal that the manufacturing sector growth and technology respond negatively to positive shocks in climate. Also, the variations in manufacturing sector performance and technology are accounted for by technology and climate shocks at 21.97% and 10.11%, respectively. Hence, we conclude that climate change inhibits technology and manufacturing sector growth in Nigeria, and this lowers labour and capital productivity in the real sector, which is consequent on economic growth and sustainable development. Therefore, the Nigerian Government should prevail on the manufacturing firms to prioritise investment that is not responsive to climate change and simultaneously attend to the challenge of technological backwardness by improving research and development in Nigeria.
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Climate change, Technology and Manufacturing Sector Growth in Oil-Rich Nigeria
Victoria Oluwatoyin Foye* and
Oluwasegun Olawale Benjamin
Department of Economics,
Faculty of Economics and Management Sciences,
University of Ibadan, Nigeria.
Email: vickieomod@yahoo.com
Email: benjaminoluwasegun@gmail.com
.*Corresponding author
Abstract: This paper analyses the dynamic relationship between climate change, technology,
and manufacturing sector growth in Nigeria from 1970-2016 using climate augmented Mankiw-
Romer-Weil theory within a Structural Vector Autoregressive (SVAR) model. Restrictions are
imposed accordingly, and the results reveal that the manufacturing sector growth and technology
respond negatively to positive shocks in climate. Also, the variations in manufacturing sector
performance and technology are accounted for by technology and climate shocks at 21.97 and
10.11 percent, respectively. Hence, we conclude that climate change inhibits technology and
manufacturing sector growth in Nigeria, and this lowers labour and capital productivity in the
real sector, which is consequent on economic growth and sustainable development. Therefore,
the Nigerian government should prevail on the manufacturing firms to prioritize investment that
is not responsive to climate change and simultaneously attend to the challenge of technological
backwardness by improving research and development in Nigeria.
Keywords: climate change, dynamic relationship, manufacturing sector growth, technology
... It is a global consensus that transiting to RE consumption is the panacea to tackling climate change and therefore very important in the growth and development process of any economy (Fadiran et al., 2019;Foye and Benjamin, 2021). As important as the technological development of RE is, the ability to increase its utilisation to achieve the macroeconomic objectives of sustainable growth and development is likewise very germane generally in research and particularly in Green Economics. ...
... Nonetheless, the recent report on the consequences of climate change unveils increased frequency and intensity of more critical droughts, floods, heat waves, wildfires and other extreme weather conditions which have caused substantial damage to the ecosystem and its services, resulting in species extinction. Similarly, humans are not left out, as climate change has not only affected food production and water availability but also physical and mental health crises are on the rise, among several others (see Foye, 2014Foye, , 2018Foye and Benjamin, 2021;Foye, 2022;IPCC, 2022;Lawrance et al., 2021). The risks are quite higher; unfortunately, the adaptation strategies are failing, and these have deepened poverty and worsened existing social inequities. ...
... The risks are quite higher; unfortunately, the adaptation strategies are failing, and these have deepened poverty and worsened existing social inequities. This is because the developing countries are most vulnerable to climate change, at the same time plagued with poor governance and weak institutional framework which inhibit successful implementation and monitoring of climate policies (Foye and Benjamin, 2021). Hence, the need to increase RE penetration cannot be overemphasised. ...
Macroeconomic Determinants of Renewable Energy Penetration: Evidence from Nigeria
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  • Dec 2022
This paper analyses the macroeconomic determinants of renewable energy penetration in Nigeria. It employs autoregressive distributed lag approach of econometrics using data from 1990 to 2020. The stationarity test reveals that the variables are stationary at level and at first difference as well as have a long-run relationship, corroborated by correction of 66% and 86% disequilibrium. The results conclude that macroeconomic variables are very important factors that determine renewable energy penetration in Nigeria. The relative effects of the resultant determinants graded income as the most important, followed by exchange rate and then inflation. The place of education and health human capital development is equally paramount to renewable energy penetration, among others. The study recommends among others, increase in renewable energy capacity by directly creating renewable energy jobs to increase its penetration and income which tops the list. This will improve other sectors as energy is germane in economic growth processes.
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... Climate change (global warming) is a long-term change in weather patterns reflected as a sustained increase in the mean temperature of the earth over decades (Foye and Benjamin 2021;ipcc n.d.; nasa: Global Climate Change; Vital Signs of the Planet n.d.). This change could be anthropogenic (human induced) or biogeographical. ...
... Over the years (2010-2020), the agricultural, industrial and services sectors have contributed about 22 percent, 25 percent and 53 percent to gross national product in Nigeria and employed 35, 12, and 53 percent of the labour force, respectively (The World Bank n.d.). The relationship between climate change and these sectors is well documented, with the argument that climate change impacts negatively on the sectors (Tanure et al. 2020;Foye 2018;Foye and Benjamin 2021;Graff Zivin, Hsiang, and Neidell 2018). This suggests that the consequences of climate change could result in a very devastating decline in income and saving which are consequent to the movement of macro prices (see Bofinger and Ries 2017) and the welfare of every population. ...
... This suggests that the consequences of climate change could result in a very devastating decline in income and saving which are consequent to the movement of macro prices (see Bofinger and Ries 2017) and the welfare of every population. Unfortunately, the climate change mitigation policies (National environmental policy, National drought and desertification policy, National forest policy, National erosion and flood control policy) designed to curb climate change (most importantly the reduction of fossil fuel consumption) have substantial economic impacts on income, consumption and saving, as these sectors are mostly reliant on fossil fuels for existence in Nigeria (Foye and Benjamin 2021). In précis, the impact of climate change on macro prices is worrisome in Nigeria, given that Nigeria lacks the capacity to cope with the consequences of climate change because of its reliance on the environment for livelihoods, high rate of poverty incidence, poor energy and road infrastructures, accelerated degradation of resources, conflicts, weak governance and, lately, high insecurity for lives and properties. ...
Climate Change and Macro Prices in Nigeria: A Nonlinear Analysis
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Full-text available
  • Jun 2022
The study analyses the impacts of climate change on macro prices (food prices, interest rate, and exchange rate). Secondary data from 1960–2019 are used, and the nonlinear autoregressive distributed lag method is employed accordingly. The results reveal that there is a long-run relationship among the variables employed. In addition, asymmetry only exists between food prices and exchange rate in the short run while it only subsists for all macro prices, except interest rate as a dependent variable, in the long run. Also, the relative effects of climate change on macro prices grade food prices with the highest effect. In fact, the continual need for climate policies in both financial and real sectors to douse the effect of climate change on macro prices cannot be overemphasised. Therefore, this study recommends that the Nigerian government and policymakers should ratify and pursue policy initiatives and strategies based on both negative and positive changes in macro prices.
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... Climate change endangers agricultural productivity and destabilizes production efficiency. Due to low resilience to climate change and variability, a lot of developing countries across the globe who are agriculture-dependent and insufficiently productive are estimated to have lower agricultural production and capacity [5,12,20]. ...
... The results are consistent with studies in Economic Community of West African States exhibiting the influence of climate variables such as rainfall and temperature, and economic variables like capital and labor affects agricultural output [29]. In the same manner, it was found out that climate change in Nigeria deters the growth of the technology and manufacturing sector decreasing labor and capital productivity consequently hampering growth and sustainable development [12,34]. ...
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... It encompasses various shifts in temperature, precipitation, wind patterns, and other climate-related factors that occur over extended periods, typically decades to millions of years. This change could be anthropogenic (human induced) or biogeographical [1]. The reality of climate change and its increasingly frequent and dire consequences pose significant threats to human populations across various regions globally. ...
Modelling Dynamic Linkage between Climate Change and Food Inflation in Nigeria
Article
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The study delves into the critical issue of climate change and its detrimental impact on various regions worldwide, including Nigeria. It emphasizes the urgent need for global efforts to mitigate these effects and advocates for measures to address human activities contributing to climate dynamics. Specifically, the study empirically examines the affiliation between climate change shocks and food price inflation in Nigeria using a Nonlinear Autoregressive Distributed Lag (NARDL) approach. The dataset covers the period from January 2011 to December 2022.The empirical findings reveal a robust cointegrating relationship between climate change shocks and food price inflation in Nigeria. Notably, climate change shocks significantly contributed to rising food prices within the study period. Furthermore, the Error Correction Term (ECT), estimated at 52 percent, indicates that food price inflation adjusts by 52 percent in the current month to counteract the initial shock experienced in the previous month. The Dynamic Multiplier graph, along with a 95 percent confidence interval, demonstrates that the explanatory variables exert substantial influence on food price inflation in Nigeria during the study period. Considering these findings, the study recommends that Nigeria should transit from traditional agricultural practices to Climate-Smart Agriculture to address future needs and climate-related challenges. Additionally, the government and stakeholders should implement alternative practices such as irrigation and the replenishment of shrinking water bodies in the Sudan and Sahel savannah regions.
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... Air pollution also contributes to respiratory tract infections and poses a significant danger to human health. The result is high infant, under-5, and adult mortality and low life expectancy (Foye and Benjamin 2021b;Perera 2017;Weil 2014). ...
Fossil Energy Consumption, Carbon Dioxide Emissions and Adult Mortality Rate in Nigeria
Article
Full-text available
  • Dec 2023
The health implications of fossil energy consumption and carbon dioxide (CO2) emissions remain a global concern. This study examines the effect of fossil energy consumption and CO2 emissions on adult mortality rate in Nigeria. The study relies on the Health Production Function and utilises the Autoregressive Distributed Lag technique to analyse time series data from 1980 to 2019. The results of the estimated model show that fossil energy consumption reduces adult mortality rates in the short run, while CO2 emissions increase adult mortality rates both in the short and long run. In addition, government health expenditure follows an inverted U-shape relationship in explaining adult mortality while foreign direct investment has a U-shape relationship with adult mortality in Nigeria. Trade openness and monetary policy are insignificant in the short and long run. It is recommended that the government should substitute clean energy for fossil fuel energy to improve the quality of life, strengthen CO2 emissions tax and ensure health funds are used for the improvement of healthcare service delivery in Nigeria.
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... CO2 emissions from different sectors of the economy also contribute to air pollution and pose a significant danger to human health. This of course worsen the under-5 mortality, infant mortality rate, life expectancy, years lost to disability (Weil 2014;Perera 2017;Foye and Benjamin 2021b). According to Arawomo, Oyebamiji, and Adegboye (2018), human health serves as human capital in the growth model. ...
Fossil Energy Consumption, Carbon Dioxide Emissions, and Mortality Rates in Nigeria
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Full-text available
  • Mar 2023
This study utilised the Autoregressive Distributed Lag model to analyse the impact of fossil energy consumption and carbon dioxide emissions on infant and under-5 mortality rates in Nigeria from 1981 to 2019. The analysis showed that carbon dioxide emissions significantly increase under-5 mortality rates and infant mortality rates in the short and long run. In addition, government health expenditure significantly decreases under-5 and infant mortality rates in the short and long run in Nigeria. Having established that environmental hazards worsen health conditions in Nigeria, the study recommended that government should encourage the consumption of environmentally friendly energy and fund the healthcare sector to improve healthcare service delivery in Nigeria.
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... Therefore, practices of green sustainability are no longer a buzzword that is confined in corporate meetings and boardrooms but is a challenging reality. To tackle this challenge, consolidated effort from all related stakeholders (management, investors, employees, consumers, suppliers, government, financing institutions, regulatory agencies, associations, local community, Non-government organisations, media), restructuring the organisational culture, resource capacity enhancement, and green technology adoption in production and supply chain are essential (Foye and Benjamin, 2021;Hossain et al., 2021;Ogiemwonyi et al., 2020;Ong et al., 2019). Reducing the ecological footprint of SMEs may be a path forward for greening other businesses (Purwandani and Michaud, 2021). ...
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... Therefore, practices of green sustainability are no longer a buzzword that is confined in corporate meetings and boardrooms but is a challenging reality. To tackle this challenge, consolidated effort from all related stakeholders (management, investors, employees, consumers, suppliers, government, financing institutions, regulatory agencies, associations, local community, Non-government organisations, media), restructuring the organisational culture, resource capacity enhancement, and green technology adoption in production and supply chain are essential (Foye and Benjamin, 2021;Hossain et al., 2021;Ogiemwonyi et al., 2020;Ong et al., 2019). Reducing the ecological footprint of SMEs may be a path forward for greening other businesses (Purwandani and Michaud, 2021). ...
Systematic Literature Review and Future Research Directions: Drivers of Environmental Sustainability Practices in Small and Medium-Sized Enterprises (SMEs)
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  • Jan 2022
Abstract: Due to SMEs crucial and dynamic role in the country's economic growth, exploring the important drivers is crucial to motivate the proper implementation of environmental sustainability (ES) practices in small and medium-sized enterprises (SMEs). The study's objectives are to identify relevant drivers of ES practices in SMEs and provide future research directions. The systematic literature review (SLR) methodology proposed by Tranfield et al. (2003) has been adopted with some modifications in this study. The authors have undertaken extensive literature review (n = 22) published between 2009 to 2020 in reputable journals and developed a framework. After analysing the relevant articles critically, 87 drivers have been identified and categorised under two main clusters (internal and external) and eight dimensions. This study contributes to the extant literature by highlighting the importance and current practices of ES in SMEs and proposed a framework integrated with multi-dimensional drivers which provide directions to sustainability scholars. Keywords: environmental sustainability practices; drivers; small and medium-sized enterprises; SMEs; systematic literature review; SLR.
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