Impact of FDI on Gas Supply: Implications on Economic Growth in Nigeria
Keywords:
Gas Supply; FDI; Economic Growth; VAR
Abstract
This study aims to examine the effect of gas supply and foreign direct investment on economic growth in Nigeria over the period 1981 to 2014. The paper employs the VAR model and the multivariate granger causality to assess the impact of the volatility of gas supply and foreign direct investment (FDI) on economic growth and to determine the causal relationship between the variables. The results of the study show that FDI and gas supply have a positive and significant effect on economic growth in Nigeria. The results also show a bidirectional causality that runs from gas supply to economic growth. The findings clearly suggest that economic growth must be inclusive for the grassroots sectors to feel the impact of gas supply and FDI in Nigeria.
References
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Barrell, R. and Pain N., (1999). Domestic Institutions, Agglomerations and Foreign Direct Investment in Europe. European Economic Review, 43, 925- 934.
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Barro, R.J. (1990). Government Spending in a Simple Model of Endogenous Growth.
Belleoumi, M. (2009). Energy Consu,tion and GDP in Tunisia: Cointegration and Causality Analysis. Energy Policy, 37: 2745-2753.
Boss, H. C., Sanders, M. and Sechi, C. (1974). Private Foreign Investment in Developing Countries: A Quantitative Study on the Macroeconomics Effects. Dardecht: Reidel
Bosworth, B. P. and Collins, S. M. (1999). Capital flows to Developing Economies: Implications for Saving and Investment. Brookings Papers on economic Activity: Brookings Institution, 143-69
Boussena, S., and Locatelli, C. (2011). Gas Market Developments and their Effect on Relations between Russia and the EU. OPEC Energy Review, 35(1): 27- 46.
Brooks, D., H. and Sumulong, L., R. (2003). Foreign Direct Investment: The Role of Policy. ERD Policy Brief No. 23. Available at: https://think- asia.org/bitstream/handle/11540/623/pb023.pdf?sequence=1.
Cabalu, H., (2010). Indicators of Security of Natural Gas Supply in Asia. Energy Policy, 38:218-225
Carcovic M. and Levine R. (2002). Does Foreign Direct Investment Accelerate Economic Growth? Department of Business Finance, University of Minessota, Working paper Series. Available at: www.worldbank.org/research/conferences/financial_globalization/fdi.pdf.
Chontannwat, J., Hunt, L. C., & Pierse, R. (2008). Does Energy Consumption Cause Economic Growth?: Evidence From a Systematic Study of Over 100 Countries. Journal of Policy Modeling, 30: 209‐220.
Costantini, V., Gracceva, F., Markandya, A., and Vicini, G. (2007). Security of Energy Supply: Comparing Scenarios from a European Perspective. Energy Policy, 35: 210-226.
Costanza, R. (1980). Embodied energy and economic valuation. Science, 210: 1219-1224.
de Jong, J., Maters, H., Scheepers, M. and Seebregts, A. (2007). EU Standards for Energy Security of Supply: Updates on the Crisis Capability Index and the Supply/Demand Index Quantification for EU-27. Energy Research Centre of the Netherlands and Clingendael international Energy Program.
Dritsaki, C., Dritsaki, M. (2014). Causal Relationship between Energy Consumption. Economic Modeling, 36, 191-197
Edoumiekumo, S.G. & Opukri, C.O. (2013). Economic Growth Factor in Nigeria:The Role of Global Trade. American Journal of Humanities and Social Sciences, Vol. 1, No. 2, 51-55.
Elliot, R.J.R, Sun, P., Chen S. (2013). Energy intensity and foreign direct investment: A Chinese city level study. Energy Economics, 40: 484-494.
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Lee, J.W. (2013). The Contribution of Foreign Direct Investment to Clean Energy Use, Carbon
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Okoro, O.I. and Chikuni, E. (2007). Power Sector Reforms in Nigeria: Opportunities and Challenges. Journal of Energy in Southern African, 18 (3)
Omodero, C. O. and Ekwe, M. C. (2014). Impact of Foreign Direct Investment on the Stock Market Performances in Nigeria (1985-2014). Applied Finance and Accounting
Omri, A. and Kahouli, B. (2014). Causal Relationships between Energy Consumption, Foreign Direct Investment and Economic Growth: Fresh Evidence fro Dynamic Simultaneous Equation Models. Energy Policy, 64: 913-922.
Omri, A., Kahouli, B. (2014). Causal Relationships between Energy Consumption, Foreign Direct Investment and Economic growth: Fresh Evidence from Dynamic Simultaneous-Equations Models. Energy Policy, 67: 913-922.
Ozturk, I. and Acavari, K. (2010). A Literature Survey on Energy-Growth Nexus.
Energy Policy, 38(1): 340-349.
Romer, P (1999). Idea Gaps and Object Gaps in Economic Development. Journal of Monetary Economics, 32.
Romer, P., M. (1986). Increasing Returns and Long-Run Growth. The Journal of Political Economy, 94: 1002-1037
Saltz, S. (1992). The Negative Correlation between Foreign Direct Investment and Economic Growth in the Third World: Theory and Evidence. Revista Internatiozional di Scienze Economiche e Commerciali, 39(7): 617-633.
Sambo, A.S., Garba, B., Zarma, I.H., and Gaji, M. M. (2009). Electricity Generation and the Present Challenges in the Nigeria Power Sector. Energy Commission of Nigeria, Abuja, Nigeria.
Sbia, R., Shahbaz, M., Hamdi, H. (2014). A Contribution of Foreign Direct Investment, Clean Energy, Trade Openness, Carbon Emissions and Economic Growth to Energy Demand in UAE.
Singer, H.W. (1950). The Distribution of Gains Between Investing and Borrowing Countries. American Economic Review, 40: 473-485.
Solow, Robert M. (1957). Technological Change and the Aggregate Production Function. Review of Economics and Statistics, 39: 312-320.
Stern, D. I. (1993). Energy use and economic growth in the USA: A multivariate approach. Energy Economics, 15: 137-150.
World Bank (2015). Africa Investment Forum. Available at: http//www.worldbank.org/content/dam/worldbank/event/Africa
World Bank Indicator [WDI] (2015). World Bank Data. Available at: https//www.worldbank.org
Yang, H. Y. (2000). A note on the causal relationship between energy and GDP in Taiwan. Energy Economics 22: 309-317.
Yergin, D. (2006). Ensuring Energy Security: Old Questions, New Answers. Foreign Affairs 85(02); 69-82. Available at: http://www.un.org/ga/61/second/daniel_yergin_energysecurity.pdf
Yu, E. S. H. and Choi, J. Y. (1985). The causal relationship between energy and GNP: An
Yu, E. S. H. and Hwang, B. (1984). The relationship between energy and GNP: Further results. Energy Economics, 6: 186-190.
Yu, E. S. H. and Jin, J. C. (1996). Cointegration tests of energy consumption, income, and employment. Resources and Energy, 14: 259-266.
Zaman, K., Khan, M. M., Ahmad, M., Rustem, R. (2012). Determinants of Electricity Consumption Function in Pakistan: Old Wine in New Bottles. Energy Policy, 50: 623–634.
Zhang, K., (2001). How Does FDI Affect Economic Growth in China?
Economics of Transition 9(3), 679-693.
Aghalino, S. O. (2009). Gas Flaring, Environmental Pollution and Abatement Measures in nigeria 1960-2001. Journal of Sustainable Development in Africa, 11(4): 219-238
Alfaro L., Chanda A., Kalemli- Ozcan S., and Sayek S., (2002). FDI and Economic Growth: The role of Local Financial Markets, paper presented at a joint Conference of the IDB and the World Bank: Available at: http://www.iadb.org/res/index.cfm
Alimi, L., O. (2014). Economic Utilization of Associated Gas in Nigeria. Analele Universitatii Eftimie Murgu Resita, 21 ISSN 1453-7397
Barrell, R. and Pain N., (1999). Domestic Institutions, Agglomerations and Foreign Direct Investment in Europe. European Economic Review, 43, 925- 934.
Barrell, R. and Pain, N. (1999). Domestic Institutions, Agglomerations and Foreign Direct Investment in Europe. European Economic Review, 43(4- 6): 925-935.
Barro, R.J. (1990). Government Spending in a Simple Model of Endogenous Growth.
Belleoumi, M. (2009). Energy Consu,tion and GDP in Tunisia: Cointegration and Causality Analysis. Energy Policy, 37: 2745-2753.
Boss, H. C., Sanders, M. and Sechi, C. (1974). Private Foreign Investment in Developing Countries: A Quantitative Study on the Macroeconomics Effects. Dardecht: Reidel
Bosworth, B. P. and Collins, S. M. (1999). Capital flows to Developing Economies: Implications for Saving and Investment. Brookings Papers on economic Activity: Brookings Institution, 143-69
Boussena, S., and Locatelli, C. (2011). Gas Market Developments and their Effect on Relations between Russia and the EU. OPEC Energy Review, 35(1): 27- 46.
Brooks, D., H. and Sumulong, L., R. (2003). Foreign Direct Investment: The Role of Policy. ERD Policy Brief No. 23. Available at: https://think- asia.org/bitstream/handle/11540/623/pb023.pdf?sequence=1.
Cabalu, H., (2010). Indicators of Security of Natural Gas Supply in Asia. Energy Policy, 38:218-225
Carcovic M. and Levine R. (2002). Does Foreign Direct Investment Accelerate Economic Growth? Department of Business Finance, University of Minessota, Working paper Series. Available at: www.worldbank.org/research/conferences/financial_globalization/fdi.pdf.
Chontannwat, J., Hunt, L. C., & Pierse, R. (2008). Does Energy Consumption Cause Economic Growth?: Evidence From a Systematic Study of Over 100 Countries. Journal of Policy Modeling, 30: 209‐220.
Costantini, V., Gracceva, F., Markandya, A., and Vicini, G. (2007). Security of Energy Supply: Comparing Scenarios from a European Perspective. Energy Policy, 35: 210-226.
Costanza, R. (1980). Embodied energy and economic valuation. Science, 210: 1219-1224.
de Jong, J., Maters, H., Scheepers, M. and Seebregts, A. (2007). EU Standards for Energy Security of Supply: Updates on the Crisis Capability Index and the Supply/Demand Index Quantification for EU-27. Energy Research Centre of the Netherlands and Clingendael international Energy Program.
Dritsaki, C., Dritsaki, M. (2014). Causal Relationship between Energy Consumption. Economic Modeling, 36, 191-197
Edoumiekumo, S.G. & Opukri, C.O. (2013). Economic Growth Factor in Nigeria:The Role of Global Trade. American Journal of Humanities and Social Sciences, Vol. 1, No. 2, 51-55.
Elliot, R.J.R, Sun, P., Chen S. (2013). Energy intensity and foreign direct investment: A Chinese city level study. Energy Economics, 40: 484-494.
Emeka, E.J., Frederick, I. & Peter, A. (2012). Macroeconomic Impact of Trade on Nigerian Growth: An Empirical Evaluation. Research Journal of Business Management and Accounting, Vol. 1(4), 079-083.
Energy Commission of Nigeria [ECN], (2006). Low Carbon: Opportunities for Nigeria. Available at: www.energy.gov.ng
Energy Commission of Nigeria [ECN], (2014). What Next After Power Sector Privatisation. Available at: www.energy.gov.ng
Georgescu-Roegen N. (1971). The Entropy Law and the Economic Process.
Harvard
Ghali, K. H., & El‐Sakka, M. (2004). Energy Use and Output Growth in Canada: A Multivariate Analysis. Journal of Energy and Development 10: 249-272. Ghosh, S. (2010). Electricity consumption and economic growth in India. Energy
Policy, 30:125-129.
Gnansounon, E. (2008). Boosting the Electricity Sector in West Africa: An Integrative Vision. IAEE Energy Forum, 3rd Quarter.
Grossman, G., and Helpman, E. (1991). Innovation and Growth in the Global Economy. MIT Press, MA.
International Energy Agency [IEA] (2015). Energy and Climate Change: World Energy Outlook Special Report. Available at: https://www.iea.org/publications/freepublications/publication/WEO2015Sp ecialReportonEnergyandClimateChange.pdf
International Energy Agency [IEA] (2015). World Energy Outlook. Available at: https://www.iea.org/Textbase/npsum
Kraft, J. and A. Kraft. (1978). On the relationship between energy and GNP.
Journal of Energy and Development, 3: 401-403.
Lee, J.W. (2013). The Contribution of Foreign Direct Investment to Clean Energy Use, Carbon
Lim, E. (2001). The Determinants of, and the Relation Between Foreign Direct Investment and Growth: A Summary of Recent Literature. IMF Working Paper, WP/01/175. Available at: https://www.imf.org/external/pubs/ft/wp/2001/wp01175.pdf
Lise, W., Hobbs, B. F., and Oostvoorn, F.V. (2012). Natural Gas Corridors among the EU and its main Suppliers: Simulation Results with the Dynamic GASTLE Model.
Maxwell, D. and Zhu, Z. (2008). Natural Gas Prices, LNG Transport Cost and the Dynamics of LNG Imports. Energy Economics,
Nayan,S., Kadir, N., Ahmad, M. and Abdullah, M. S. (2013). Revisiting Energy Consumption and GDP: Evidence from Dynamic Panel Data Analysis. Procedia of Economics and Finance, 7: 42-47.
Odularu, G., O., and Okonkwo, C. (2009). Does Energy Consumption Contributes to Economic Performance? Empirical Evidence from Nigeria. Journal of Economics and International Finance. Available online at http://www.academicjournals.org/JEIF
Oke, Y. (2016). The Pathway to Energy Liberation in Nigeria. Lessons for Namibia. Perspective of Energy Security and Renewable Energies in Sub- Saharan Africa, 2nd Edition, Namibia.
Okoro, O.I. and Chikuni, E. (2007). Power Sector Reforms in Nigeria: Opportunities and Challenges. Journal of Energy in Southern African, 18 (3)
Omodero, C. O. and Ekwe, M. C. (2014). Impact of Foreign Direct Investment on the Stock Market Performances in Nigeria (1985-2014). Applied Finance and Accounting
Omri, A. and Kahouli, B. (2014). Causal Relationships between Energy Consumption, Foreign Direct Investment and Economic Growth: Fresh Evidence fro Dynamic Simultaneous Equation Models. Energy Policy, 64: 913-922.
Omri, A., Kahouli, B. (2014). Causal Relationships between Energy Consumption, Foreign Direct Investment and Economic growth: Fresh Evidence from Dynamic Simultaneous-Equations Models. Energy Policy, 67: 913-922.
Ozturk, I. and Acavari, K. (2010). A Literature Survey on Energy-Growth Nexus.
Energy Policy, 38(1): 340-349.
Romer, P (1999). Idea Gaps and Object Gaps in Economic Development. Journal of Monetary Economics, 32.
Romer, P., M. (1986). Increasing Returns and Long-Run Growth. The Journal of Political Economy, 94: 1002-1037
Saltz, S. (1992). The Negative Correlation between Foreign Direct Investment and Economic Growth in the Third World: Theory and Evidence. Revista Internatiozional di Scienze Economiche e Commerciali, 39(7): 617-633.
Sambo, A.S., Garba, B., Zarma, I.H., and Gaji, M. M. (2009). Electricity Generation and the Present Challenges in the Nigeria Power Sector. Energy Commission of Nigeria, Abuja, Nigeria.
Sbia, R., Shahbaz, M., Hamdi, H. (2014). A Contribution of Foreign Direct Investment, Clean Energy, Trade Openness, Carbon Emissions and Economic Growth to Energy Demand in UAE.
Singer, H.W. (1950). The Distribution of Gains Between Investing and Borrowing Countries. American Economic Review, 40: 473-485.
Solow, Robert M. (1957). Technological Change and the Aggregate Production Function. Review of Economics and Statistics, 39: 312-320.
Stern, D. I. (1993). Energy use and economic growth in the USA: A multivariate approach. Energy Economics, 15: 137-150.
World Bank (2015). Africa Investment Forum. Available at: http//www.worldbank.org/content/dam/worldbank/event/Africa
World Bank Indicator [WDI] (2015). World Bank Data. Available at: https//www.worldbank.org
Yang, H. Y. (2000). A note on the causal relationship between energy and GDP in Taiwan. Energy Economics 22: 309-317.
Yergin, D. (2006). Ensuring Energy Security: Old Questions, New Answers. Foreign Affairs 85(02); 69-82. Available at: http://www.un.org/ga/61/second/daniel_yergin_energysecurity.pdf
Yu, E. S. H. and Choi, J. Y. (1985). The causal relationship between energy and GNP: An
Yu, E. S. H. and Hwang, B. (1984). The relationship between energy and GNP: Further results. Energy Economics, 6: 186-190.
Yu, E. S. H. and Jin, J. C. (1996). Cointegration tests of energy consumption, income, and employment. Resources and Energy, 14: 259-266.
Zaman, K., Khan, M. M., Ahmad, M., Rustem, R. (2012). Determinants of Electricity Consumption Function in Pakistan: Old Wine in New Bottles. Energy Policy, 50: 623–634.
Zhang, K., (2001). How Does FDI Affect Economic Growth in China?
Economics of Transition 9(3), 679-693.
Published
2019-06-25
Section
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