Heterogeneous Effects of Climate Change on Output across the Manufacturing Subsectors in Nigeria

Articles in Press

Document Type : Research Paper

Authors

1 Department of Research and Data Analysis , Lightway Research and Technology Centre, Ilorin, Nigeria

2 Department of Economics, Faculty of Economics and Management Sciences, University of Ibadan, Ibadan, Nigeria

10.22059/ier.2024.373094.1007948

Abstract

Climate change remains a global issue despite the efforts of international organisations to combat dangerous global warming, especially in developing countries like Nigeria. Therefore, this study aims to analyse the heterogeneous effects of climate change on output across the manufacturing subsectors in Nigeria from 1990 to 2021. Fully modified ordinary least squares method is used to analyze the time series data, and canonical cointegrating regression and diagnostic tests (normality and Wald restriction tests) are conducted to check the robustness of the models. The empirical results reveal that climate change has a significant negative effect on manufacturing output at the aggregate level and across the manufacturing subsectors. The adverse effect is particularly strong for Textile, Apparel and Footwear, Plastic and Rubber Products, and Chemical and Pharmaceutical Products subsectors. Moreover, the study finds that manufacturing output at the aggregate level and across the manufacturing subsectors responds negatively to exchange rate and positively to labour and capital. Based on the results, the study recommends that the government should discourage fossil fuel consumption and promote renewable energy consumption such as solar, wind, hydro, and geothermal to slow climate change. Also, the government needs to implement structural reforms to reduce reliance on foreign input and final products; enhance domestic production and exportation, increase foreign reserves, and strengthen Nigerian currency.

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Iranian Economic Review

Articles in Press, Accepted Manuscript
Available Online from 19 May 2024

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