A enhance economic growth. On these grounds, it

A great percentage of the world’s primary energy demand is met by fossil fuels (World Energy Outlook, 2016). Unfortunately, the use of fossil fuels yields numerous undesired joint products, with carbon dioxide (C02) being the most prominent among them. This man-made change has negative and potentially irreversible effects on human health, air and water quality, agriculture, welfare and the world economy. Being a major exporter of fossil duel, Nigeria is susceptible to increased CO2 emissions due to its utilization in construction, industrial production and social activities. Environmental degradation can also be caused by factors such as population, transportation, poverty, congestion and traf?c, soil erosion, exploitation of open access resource due to ill-de?ned property rights, etc. (Borhan et al., 2012). Intensive and excessive use of fossil fuels is one of the main reasons for the signi?cant increase in anthropogenic Green House Gas emissions that lead to climate change (Chen et al., 2013). Furthermore, Boopen and Vinesh (2011) posit that CO2 emissions have grown dramatically in the past century, largely due to human activities, primarily by the use of fossil fuels and changes in land use. This increase in the emissions of green house gases causes increase in global warming which has become a major threat to mankind.  A plethora of studies have examined the relationship between environmental quality and economic growth with many often hinging their studies on the Environmental Kuznet Hypothesis (see e.g., Grossman and Krueger, 1991; and Kraft and Kraft, 1978). However, there is a growing debate on the role of institutions (such as rules of law, bureaucratic quality, corruption, risk of expropriation and government repudiation of contracts) and how this affects this relationship (see e.g., Lau et al., 2014). This has generated the argument that economic performance of developed and developing countries largely depends on each country’s institutional conditions or absorptive capacity. The quality of institutions plays an important role whereby it helps to reduce environmental degradation in a country even if the country’s income is low. This implies that countries are expected to enjoy improvements to the environment with higher future income levels because institutional quality can reduce the environmental cost of higher economic growth. This is true because the quality of institutions matters as it helps to minimise opportunism and foster cooperative behaviour among agents, and to enable agents internalise externalities. Thus, the improvement of institutional quality can provide a favourable environment for the adoption of cooperative solutions that will in turn help to enhance economic growth. On these grounds, it is generally agreed, based on the findings of existing literature (see e.g., Acemoglu et al., 2006 and Chauffour, 2011) that in order to minimize the effect of pollution on economic growth, the appropriate institutions must first be in place. However, does this assertion hold for Nigeria?Economic indicators, such as Gross Domestic Product (GDP), in general are not designed to be a comprehensive measure of well-being and prosperity. Kuznets (1934), states that the welfare of a nation can scarcely be inferred from a measurement of national income. However, GDP’s clear methodology and a long history of its usage by economists and policymakers alike, make it a widely exploited indicator of economic activity. Therefore, GDP is used in this paper as an indicator of economic growth. “Without measures of economic aggregates like GDP, policymakers would be a drift in a sea of unorganized data” (Samuelson and Nordhaus, 1995). Generally, producers are prone to using non-renewable sources of energy such as carbon based fossil fuels. Combustion of these fuels produces CO2 and other GHG emissions as a by-product. GDP grows with the growing increase in production, which consequentially means an increase in the use of fossil fuels and the growth of CO2 emissions. One possible solution is to create a low-carbon world economy, which in turn has technological, economic, engineering, and organizational obstacles. The biggest obstacle in creating a global agreement that takes into account the consequences of climate change is the strong negotiating position of countries with great reserves of fossil fuels, such as the United States, Russia, China, Canada, and the countries of the Persian Gulf. Due to different levels of ?nancial and technological development of countries, and different intensities of CO2 emissions, a global instrument that takes into account all of these obstacles is essential.In the existing literature, a number of studies have examined the CO2 emissions, institutions and economic growth nexus with many often concentrating only on developed economies (see e.g., Halkos and Tzeremes, 2013) and very few researches on developing economies. To the best of the researchers’ knowledge, this is the only country specific on the effect of CO2 emission, institutions and economic growth in Nigeria. The study examines the joint impact of CO2 emission and institutions on economic growth. Moreover, the study is intended to contribute to the existing literature; relatively few studies have empirically examined the effect of institutional quality in the CO2 emissions – economic growth nexus. This paper investigates the effect of CO2 emission and institutions on economic growth in Nigeria. The sequence of this paper is clear. Section II highlights the trend of discussion in the literature. Section III discusses the data and methodological issues while a discussion of the main empirical ?ndings is provided in Section IV. Section V concludes.


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