Research Article

Climate Change Scare and FDI Migration

European Journal of Sustainable Development Research, 2022, 6(3), em0191,
Full Text (PDF)


Does foreign direct investment (FDI) migration into Nigeria and Sierra Leone generate a climate change scare (CCS) based on the pollution haven-halo hypothesis? The quasi-experimental design study utilized data from the world development indicator, 1970-2019 using a nonlinear autoregressive distributed lag (NARDL) model to estimate the dynamic impact of FDI migration on CO2 emissions (a proxy for CCS). The study found that the change in FDI migration in Sierra Leone causes upward CO2 emissions. The positive impact of FDI migration on CO2 emission implies that the pollution haven hypothesis exists in Sierra Leone. Comparatively, dynamic FDI migration into Nigeria caused a mixed impact on CO2 emissions. The result found that an increase in FDI migration caused a decrease in CO2 emissions in Nigeria. Similarly, a decrease in FDI migration caused an increase in CO2 emissions. Also, the Wald F-test suggests a long-run asymmetry and symmetry between FDI and CO2 emissions in Sierra Leone and Nigeria, respectively. Hence, there is the presence of a pollution halo-haven issue in Nigeria. The study, therefore, recommends that green FDI financing that supports environment-friendly technology export into Nigeria and Sierra Leone that would enable optimal climate change control both in the short- and long-term. Thus, technology that efficiently improves environmental quality, preserves, and protects the ecosystem should be imported into Sierra Leone and Nigeria.


FDI migration climate change scare pollution haven-halo hypotheses


Amaefule, C., & Ebelebe, L. O. (2022). Climate Change Scare and FDI Migration. European Journal of Sustainable Development Research, 6(3), em0191.
Amaefule, C., and Ebelebe, L. O. (2022). Climate Change Scare and FDI Migration. European Journal of Sustainable Development Research, 6(3), em0191.
Amaefule C, Ebelebe LO. Climate Change Scare and FDI Migration. EUR J SUSTAIN DEV RES. 2022;6(3):em0191.
Amaefule C, Ebelebe LO. Climate Change Scare and FDI Migration. EUR J SUSTAIN DEV RES. 2022;6(3), em0191.
Amaefule, Chukwuemeka, and Lawrence Oghenemaro Ebelebe. "Climate Change Scare and FDI Migration". European Journal of Sustainable Development Research 2022 6 no. 3 (2022): em0191.
Amaefule, Chukwuemeka et al. "Climate Change Scare and FDI Migration". European Journal of Sustainable Development Research, vol. 6, no. 3, 2022, em0191.


  1. Agosin, M. R. and Machado, R. (2005). Foreign investment in developing countries: Does it crowd in domestic investment? Oxford Development Studies, 33(2), 149-162.
  2. Aitken, B. J. and Harrison, A. E. (1999). Do domestic firms benefit from direct foreign investment? Evidence from Venezuela. American Economic Review, 89(3), 605-618.
  3. Akinlo, A. E. (2004). Foreign direct investment and growth in Nigeria: An empirical investigation. Journal of Policy Modelling, 26(5), 627-639.
  4. Alfaro, L., Chandra, A., Kalemi-Ozcan, S. and Sayek, S. (2004). FDI and economic growth: The role of local financial markets. Journal of International Economics, 64(1), 89-112.
  5. Alvarez-Herranz, A., Balsalobre-Lorente, D., Shahbaz, M. and Cantos, J. M. (2017). Energy innovation and renewable energy consumption in the correction of air pollution levels. Energy Policy, 105, 386-397.
  6. Amaefule, C. (2019). Competitiveness, capital movement inward, and eco EMU in WAMZ. International Journal Research and Scientific Innovation, 6(12), 254-262.
  7. Amaefule, C. and Shoaga, A. (2019). FDI spillover and the size of trade growth in West African Monetary Zone. International Journal of Innovative Research and Development, 8(10), 29-34.
  8. Amaefule, C., Kalu, I. E. and Shoaga, A. (2019). Asymmetric modelling, capital account liberalization, and size of productivity in selected WAMZ countries. IOSR Journal of Economics and Finance, 10(5), 91-98.
  9. Ariyo, A. (1998). Investment and Nigeria’s economic growth. In Proceedings of the Investment in the Growth Process (pp. 389-415).
  10. Arteta, C., Eichengreen, B. and Wyplosz, C (2001). When does capital account liberalization help more than it hurts?
  11. Asghari, M. (2013). Does FDI promote MENA region’s environment quality? Pollution halo or pollution haven hypothesis. International Journal of Scientific Research in Environmental Sciences, 1(6), 92-100.
  12. Asiedu, E. (2002). On the determinants of FDI to developing countries: Is Africa different? World Development, 30(1), 107-119.
  13. Baek, J. (2016). A new look at the FDI-income-energy-environment nexus: Dynamic panel data analysis of ASEAN. Energy Policy, 91, 22-27.
  14. Bailliu, J. N. (2000). Private capital, financial development, and economic growth in developing countries. Bank of Canada.
  15. Balasubramanyam, V. N., Salisu, M. and Sapsford, D. (1999). FDI as an engine of growth. The Journal of International Trade and Economic Development, 8(1), 27-40.
  16. Bank of England. (2015). The impact of climate change on the UK insurance sector: A climate change adaptation report by the prudential regulation authority. Bank of England.
  17. Barry, F. (2002). FDI, infrastructure, and the welfare effects of labour migration. The Manchester School, 70(3), 364-379.
  18. Battern, S. (2018). Climate change and the macro-economy: A critical review. Bank of England.
  19. Bauer, M. D. and Rudebusch, G. D. (2020). The rising cost of climate change: Evidence from the Bond market. Federal Reserve Bank of San Francisco WP, 2020-25.
  20. Bello, A. and Adeniyi, O. (2010). FDI and the environment in developing economies: Evidence from Nigeria. Environment Research Journal, 4(4), 291-297.
  21. Blomström, M. and Kokko, A. (1998). Multinational corporation and spillovers. Journal of Economic Survey, 12(3), 247-277.
  22. Blomström, M. and Kokko, A. (2000). Outward investment, employment and wages in Swedish multinationals. Oxford Review of Economic Policy, 16(3), 76-89.
  23. Borensztein, E., De Gregorio, J. and Lee, J.-W. (1998). How does foreign direct investment affect growth? Journal of International Economics, 45(1), 115-135.
  24. Brunnermeier, S. B. and Levinson, A. (2004). Examining the evidence on environmental regulation and industry location. Journal of Environment and Development, 13(1), 6-41.
  25. Bruno, V. and Shin, H. S. (2015). Capital flows and the risk-taking channel of monetary policy. Journal of Monetary Economics, 71, 119-132.
  26. Calderon-Rossel, J. R. (1985). Towards the theory of foreign direct investment. Oxford Economic Papers, 37(2), 282-291.
  27. Calvo, G. A. and Reinhart, C. M. (1999). Capital flow reversals, the exchange rate debate, and dollarization. Finance and Development, 36, 13-15.
  28. Calvo, G. A. and Reinhart, C. M. (2000). When capital inflows come to a sudden stop: Consequence and policy options. In P. Kenen and A. Swoboda (Eds.), Reforming the international monetary and financial system (pp. 175-201). International Monetary Fund.
  29. Calvo, G. A., Leiderman, L. and Reinhart, C. M. (1993). Capital inflows and real exchange rate appreciation in Latin America: The role of external factors. IMF Staff Papers, 40(1), 108-151.
  30. Caprio, G. and Honohan, P. (1999). Restoring banking stability: Beyond supervised capital requirement. Journal of Economic Perspectives, 13(4), 43-64.
  31. Cavallo, E. and Noy, I. (2010). The economics of natural disasters: A survey. IDB Working Paper Series.
  32. Caves, R. E. (1996). Multinational enterprise and economic analysis. Cambridge University Press.
  33. Chenery, H. B. and Strout, A. M. (1966). Foreign assistances and economic development. American Economic Review, 56(4), 679-733.
  34. Claessens, S., Forbes, K. J. (2001). International financial contagion: An overview of the issues and the book. In S. Claessens and K. J. Forbes (Eds.), International financial contagion (pp. 3-17). Springer.
  35. Copeland, B. R. and Taylor, M. S. (2004). Trade growth and the environment. Journal of Economic Literature, 42(1), 7-71.
  36. Cuervo, J. and Gandhi, V. P. (1998). Carbon taxes: Their macroeconomic effects and prospects for global adoption: A survey of the literature. IMF Working Paper 1998/073.
  37. Dasgupta, S., Laplante, B., Wang, H. and Wheeler, D. (2002). Confronting the environmental Kuznets curve. Journal of Economic Perspectives, 16(1), 147-168.
  38. de Mello Jr., L. R. (1997). Foreign direct investment in developing countries and growth: A select survey. Journal of Developing Studies, 34(1), 1-34.
  39. de Mello Jr., L. R. (1999). Foreign direct investment-led growth: Evidence from time series and panel data. Oxford Economic Papers, 51(1), 133-151.
  40. Deng, B. and De-yong, S. (2008). Study of the relationship between China’s foreign, FDI and environmental pollution: 1995-2005. International Trade Issues, 4, 101-108.
  41. Detragiache, E. and Spilimbergo, A. (2001). Crisis and liquidity: Evidence and interpretation. IMF Working Paper.
  42. Dhaoui, A., Bacha, S. and McMillan, D. (2017). Investor emotional biases and trading volume’s asymmetric response: A non-linear ARDL approach tested in S&P500 stock market. Cogent Economics & Finance, 5(1), 1274225.
  43. Dietz, T. and Rosa, E. A. (1997). Effects of population and affluence on CO2 emission. Proceedings of the National Academy of Science, 94(1), 175-179.
  44. Dinda, S. (2004). Environmental Kuznets curve hypothesis: A survey. Ecological Economics, 49(4), 431-455.
  45. Doytch, N. and Uctum, M. (2011). Globalization and the environmental spillovers of sectoral FDI.
  46. Dymski, G. A. (2005). Financial globalization, social exclusion, and financial crisis. International Review of Applied Economics, 19(4), 439-457.
  47. Edwards, S. (1990). Capital flows, FDI, and debt-equity swaps in developing countries. NBER Working Paper No. 3497.
  48. Ehrlich, P. R. and Holdren, J. P. (1971). Impact of population growth. Science, New Series, 171(3977), 1212-1217.
  49. Ekpo, A. H. (1997). FDI in Nigeria: Evidence from time series data. CBN Economic and Financial Review, 35(1), 47-64.
  50. Fankhauser, S. and Tol, R. S. J. (2005). On climate change and economic growth. Resource and Energy Economics, 27(1), 1-17.
  51. Fedderke, J. W. and Romm, A. T. (2006). Growth impact and determinants of FDI into South Africa, 1956-2003. University of Cape Town Working Paper 12.
  52. Grimes, P. and Kentor, J. (2003). Exporting the greenhouse: Foreign capital penetration and CO emissions 1980-1996. Journal of World-Systems Research, 9(2), 261-275.
  53. Grossman, G. M. and Helpman, E. (1991). Trade, knowledge spillover, and growth. European Economic Review, 35(2-3), 517-526.
  54. Gyapong, A. O. and Karikari, J. A. (1999). Direct foreign investment strategies and economic performance in Ghana and Ivory Coast. Journal of Economic Development, 24(1), 133-147.
  55. Hanson, G. (2001). Should countries promote FDI? G-24 Discussion Paper, No. 9.
  56. HDR. (2019). Human development report 2019.
  57. Henry, P. B. (2000). Do stock market liberalization cause investment booms? Journal of Financial Economics, 58(1-2), 301-334.
  58. Irandoust, M. and Ericsson, J. (2005). Foreign aid, domestic savings, and growth in LDCs: An application of likelihood-based panel cointegration. Economic Modelling, 22(4), 616-627.
  59. Kaminisky, G. L., Reinhart, C. M. and Vegh, C. A. (2003). The unholy trinity of financial contagion. Journal of Economic Perspectives, 17(4), 51-74.
  60. Kathuria, V. (2018). Does environmental governance matter for FDI? Testing the pollution haven hypothesis for Indian states. Asian Development Review, 35(1), 81-107.
  61. Kellenberg, D. (2009). An empirical investigation of the pollution haven effect with strategic environment and trade policy. Journal of International Economics, 78(2), 242-255.
  62. Keynes, J. M. (1936). The general theory of employment, interest, and money. Stellar Classics.
  63. Khan, A. A. (2014). FDI flows in developing countries: An empirical study. Global Journal of Finance and Management, 6(1), 27-34.
  64. Kim, H. S. and Baek, J. (2011). The environment consequences of economic growth revisited. Economics Bulletin, 31(2), 1198-1211.
  65. Kose, M. A., Prasad, E. S. and Terrones, M. E. (2003). Financial integration and macroeconomic volatility. IMF Staff Papers, 50, 119-142.
  66. Lall, S. and Streeten, P. (1977). FDI, transnational and developing countries. Macmillan.
  67. Ledyaeva, S. and Linden, M. (2006). FDI and economic growth: Empirical evidence from Russia regions. BOFIT Discussion Paper No. 17/2006.
  68. Lee, M. and Tcha, M. J. (2004). The color of money: The effects of FDI on economic growth in transition. Review of International Economics, 14(3), 478-493.
  69. Lensink, R. and Morrissey, O. (2001). FDI: Flows, volatility, and growth in developing countries. CREDIT Research Paper.
  70. Levine, R. (1996). Foreign banks, financial development, and economic growth. Journal of Economic Literature, 35, 224-254.
  71. Lim, E.-G. (2001). Determinants of, and the relation between, foreign direct investment and growth: A summary of the recent literature. IMF Working Paper No. 01/175.
  72. McKinnon, R. I. (1973). Money and capital in economic development. Brookings Institution.
  73. Mody, A. and Taylor, M. P. (2013). International capital crunches: The time varying role of informational asymmetries. Applied Economics, 45(20), 2961-2973.
  74. Moyo, C. and Le Roux, P. (2020). Financial liberalization, financial development, and financial crises in SADC countries. Journal of Financial Economic Policy, 12(4), 477-494.
  75. Murthy, K. V. B. and Gambhir, S. (2017). International trade and foreign direct investment: Empirical testing of the trade-environmental triangle. Transnational Corporations Review, 9(2), 122-134.
  76. Murthy, K. V. B. and Gambhir, S. (2018). Analysing environment Kuznets curve and pollution haven hypothesis in India in the context of domestic and global policy change. Australasian Accounting, Business and Finance Journal, 12(2), 134-156.
  77. NASA. (2020). Earth is heating up. NASA.
  78. Patterson, K. N., Montanjees, M., Cardillo, C. and Motala, J. (2004). Foreign direct investment: Trend, data, availability, concepts, and recording practices. IMF.
  79. Pessoa, A. (2007). FDI and host country productivity: A review. FEP Working Paper 251.
  80. Polloni-Silva, E., Ferraz, D., de Castro Camioto, F, Rebelatto, do Nascimento Rebelatto, D. A. & Moralles, H. F. (2021). Environmental Kuznets curve and the pollution-halo/haven hypotheses: An investigation Brazilian municipalities. Sustainability, 13(8), 4114.
  81. Porter, M. E. (1991). America’s green strategy. Scientific American, 264(4), 150-168.
  82. Reinhart, C. M., Kaminisky, G. L. and Vegh, C. A. (2002). Two hundred years of contagion. MPRA Paper 13229.
  83. Reisen, H. and Soto, M. (2001). Which types of capital inflows foster developing-country growth? International Finance, 4(1), 1-14.
  84. Rodrik, D. and Velasco, A. (2000). Short-term capital flows. NBER Working Paper 7364.
  85. Sauvant, K. P. and Mann, H. (2017). Strengthening the global trade and investment system for sustainable development. World Economic Forum.
  86. Schneider, F. and Frey, B. S. (1985). Economic and political determinants of foreign direct investment. World Development, 13(2), 161-175.
  87. Seker, F., Ertugrul, H. M. and Cetin, M. (2015). The impact of foreign direct investment on environmental quality: A bounds testing and causality analysis for Turkey. Renewable and Sustainable Energy Reviews, 52, 347-356.
  88. Shahbaz, M., Nasreen, S., Abbas, F. and Anis, O. (2015). Does foreign direct investment impede environmental quality in high-, middle-, and low-income countries? Energy Economics, 51, 275-287.
  89. Shaw, E. S. (1973). Financial deepening in economic development. Oxford University Press.
  90. Shin, Y., Yu, B. and Greenwood-Nimmo, M. (2014). Modelling asymmetric cointegration and dynamic multipliers in a nonlinear ARDL framework. In R. Sickles and W. Horrace (Eds.), Festschrift in honor of Peter Schmidt (pp. 281-314). Springer.
  91. Singhania, M. and Saini, N. (2021). Demystifying pollution haven hypothesis: Role of FDI. Journal of Business Research, 123, 516-528.
  92. Sjöholm, F. (1999). Technology gap, competition, and spillovers from direct foreign investment: Evidence from established data. The Journal of Development Studies, 36(1), 53-73.
  93. Smarzynska Javorcik, B. (2004). Does foreign direct investment increase the productivity of domestic firms? In search of spillovers through backward linkages. American Economic Review, 94(3), 605-627.
  94. Solow, R. M. (1956). A contribution to the theory of economic growth. The Quarterly Journal Economics, 70(1), 65-94.
  95. Stefanovic, S. (2008). Market entry strategies within foreign investment decision process in transition economies. Economic Themes, 4, 85-100.
  96. Stern, N. (2013). The structure of economic modelling of the potential impacts of climate change: Grafting gross underestimation of risk onto already narrow science model. Review of Economic Literature, 51(3), 838-859.
  97. Stulz, R. M. (1999). International portfolio flows and security markets. NBER Working Paper No 99-3.
  98. Sullivan, C. A. and Huntingford, C. (2009). Water resources, climate change, and human vulnerability. 18th World IMACS/MODSIM congress, Cairns/ Australia.
  99. Tang, S., Selvanathan, E. A. and Selvanathan, S. (2008). Foreign direct investment, domestic investment, and economic growth in China: A time series analysis. The World Economy, 31(10), 1292-1310.
  100. Tintin, C. (2012). Does FDI spur economic growth and development? A comparative study.
  101. Tol, R. S. J. (2008). Why worry about climate change? A research agenda. Environmental Values, 17(4), 437-470.
  102. Umoh, O., Jacob, A. O. and Chuku, C. A. (2012). Foreign direct investment and economic growth in Nigeria: An analysis of the endogenous effects. Current Research Journal of Economic Theory, 4(3), 53-66.
  103. UNCTAD. (2000). World investment report 2000. UNCTAD.
  104. Wang, S., Zhao, T., Zheng, H. and Hu, J. (2017). The STIRPAT analysis on carbon emission in Chinese cities: An asymmetric laplace distribution mixture model. Sustainability, 9(12), 2237.
  105. Wei, S.-J. (2001). Domestic crony capitalism and international fickle capital: Is there a connection? International Finance, 4, 15-46.
  106. Wheeler, D. and Mody, A. (1992). International investment location decisions: The case of U.S. firms. Journal of International Economics, 33(1-2), 57-76.
  107. World Bank. (2001). GDF report. World Bank.
  108. World Bank. (2021). World development indicators data. World Bank.
  109. Zhang, K. H. (2001). How does foreign direct investment affect economic growth in China? Economics of Transition, 9(3), 679-693.
  110. Zhang, K. H. (2006). FDI and host countries’ export: The case of China. Economia Internationale, 59(1), 113-127.


Creative Commons License
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.