Abstract: Economic globalization has been lauded as a way of increasing World output based on the economies of scale property and exchange of technology, ideas and information. However, as more emphasis is put on the globalization of industry, the need for environmental sustainability–although as important as ever–is often not included in the conversation. This paper explored the contributions of trade liberalization and foreign direct investment inflows on growth in Nigeria and the implications of economic globalization on the Nigerian environment by applying the co-integration and Vector Error Correction Mechanism using data from 1981 to 2013 sourced from World Development Indicators (WDI) and Central Bank of Nigeria Statistical Bulletin. The findings indicated that trade openness and FDI inflows have made substantial contributions to economic growth in Nigeria. GDP and trade openness also aided environmental quality in the long run. FDI inflows on the other hand contributed to the worsening of the environment evident in more pollution emission in the long run. The paper recommends that Nigeria must put in place sound environmental policy to ameliorate the globalization effects on the environment particularly in FDI attractions. In addition, government and stakeholders alike must adhere to strict environmental enforcement to avoid excessive pollution discharges, indiscriminate deforestation, over exploitation of the flora, fauna and marine resources, and ill defined property rights among others. Government should realise effective macro-economic policies along with momentous improvements in the structure and functioning systems of governance for stabilising economic growth along with trade and financial liberalisation reforms.
Keywords: Globalization, Economic Growth, Environmental Sustainability, Trade Openness, Foreign Direct Investment, Co integration and Vector Error Correction Model.
[1]. Analogbei, F.C.O. (2000). Trad Reforms and Productivity in Nigeria, in Proceedings of the Ninth Conference of the Zonal Research Units of the CBN Titled: Productivity and Capacity Building, 159-185. Lagos: CBN press
[2]. Antweiler, W., Brian R. C., & Taylor, M.S. (2001). Is Free Trade Good for the Environment? The American Economic Review 91 (4): 877-908.
[3]. Arrow, K., Bolin, B., Costanza, R., Folke, C., Holling, C.S., Janson, B., Levin, S., Maler, K., Perrings, C., and Pimental, D. (1995). Economic growth, carrying capacity and the environment. Science 15, 91-95.
[4]. Ajide, B. & Adeniyi, O. (2010). FDI and Environment in Developing Economies: Evidence from Nigeria. Environmental Research Journal, Volume 4, Issue 4, Pages No 291-297.
[5]. Central Bank of Nigeria (2008). CBN Statistical Bulletin and Statements of Accounts. Vol. 18.