Dynamic Linkages Between Developing Economy and Environmental Pollution: An Autoregressive Distributed Lag Statistical Approach

Abstract

The goal of the study is to examine the dynamic linkages between developing economy and environmental pollution. FDI, the tourism industry, electricity use, and GDP growth have all been studied in relation to CO2 emissions over the period from 1980 to 2019. The study applied the ARDL model for statistical data analysis and to ensure the results reliability, the FMOLS and DOLS models have been used in conjunction. The results disclose a significant negative correlation between GDP squared and the observed data. FDI and GDP growth, in contrast, have significant long-term positive effects on CO2 emissions. Due to Pakistan’s lack of infrastructure and transportation facilities, the tourism industry has a long-term negative impact on Pakistan’s CO2 emissions, which are expected to rise over the next several decades. CO2 emissions and GDP growth are linked in a U-shape. The results also showed that GDP growth and electricity use have no significant short-term impacts on CO2 emissions; only FDI coefficients have a negative significance. The Granger causality test found connections between electricity use, FDI, GDP, and CO2 emissions shows a one-way causation.