Iranian Economic Review

Iranian Economic Review

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

Document Type : Research Paper

Authors
Oluwasegun Olawale Benjamin 1
Victoria Oluwatoyin Foye 2
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 organizations to combat dangerous global warming, especially in developing countries like Nigeria. Therefore, this study aims to analyze the heterogeneous effects of climate change on output across the manufacturing subsectors in Nigeria from 1990 to 2021. The fully modified ordinary least squares method is used to analyze the time series data, and canonical cointegrating regression, along with diagnostic tests (normality and Wald restriction tests), is 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 labor 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 inputs and final products, enhance domestic production and exportation, increase foreign reserves, and strengthen the Nigerian currency.
Keywords
climate change
environmental impact
fully modified ordinary least squares
manufacturing sector
sustainable development
Subjects
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Iranian Economic Review
Volume 30, Issue 2
Spring 2026
Pages 540-574