Trade Openness And Co2 Emission: Evidence From Nigeria

Abstract

This study embarked on an empirical investigation of the impact of trade openness on CO2 emission in Nigeria. The findings here indicate a nuanced relationship between trade openness, GDP, population, and CO2 emissions in Nigeria. We specifically observe that, trade openness which is the explanatory variable of utmost interest has a marginal positive impact on CO2 and NO2 emissions but reduces CH4 emissions. The results further reveal the unique perspective on sectoral dynamics in CO2 emissions. Fuel-related emissions are driven by rising income levels (YPC) and population growth (POPR), showing that economic and demographic expansion increase energy demand. On the other hand, trade flows (TRDF) have a smaller positive impact on fuel emissions, indicating limited influence. In manufacturing, emissions are strongly tied to industrial output (YMAN), with nearly proportional effects. These results fail to conform to traditional narratives and emphasize the complexity of emissions drivers in a diversifying economy. Similarly, the sectoral analysis highlights the role of economic activities in shaping emissions patterns and the need for targeted mitigation strategies.