Does Chinese FDI, Climate Change, and CO 2 Emissions Stimulate Agricultural Productivity? An Empirical Evidence from Pakistan

Shakeel Ahmad, Muhammad Tariq, Touseef Hussain, Qasir Abbas, Hamidullah Elham, Iqbal Haider and Xiangmei Li
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Muhammad Tariq: School of Economics and Management, Southeast University, No.2 Dongnandaxue Road, Nanjing 211189, China
Touseef Hussain: College of Public Administration, Nanjing Agricultural University, Nanjing 210095, China
Qasir Abbas: College of Economics and Management, Nanjing Agricultural University, Nanjing 210095, China
Hamidullah Elham: College of Economics and Management, Nanjing Agricultural University, Nanjing 210095, China
Iqbal Haider: Business School of Economics and Management, University of Sargodha, Sargodha 40100, Pakistan
Xiangmei Li: College of Economics and Management, Nanjing Agricultural University, Nanjing 210095, China

Sustainability, 2020, vol. 12, issue 18, 1-20

Abstract: Pakistan’s agricultural sector growth is dwindling from the last several years due to insufficient foreign direct investment (FDI) and a drastic climate change-induced raise in temperature, which are severely affecting agricultural production. The FDI has paramount importance for the economy of developing countries as well as the improvement of agricultural production. Based on the time series data from 1984 to 2017, this paper aims to highlight the present situation of the agriculture sector of Pakistan and empirically analyze the short-run and long-run impact of Chinese foreign direct investment (CFDI), climate change, and CO 2 emissions on agricultural productivity and causality among the variables. The Autoregressive Distributed Lag Model (ARDL) model and Granger Causality test were employed to find out the long-run, short-run, and causal relationships among the variables of interest. Furthermore, we have employed the Error Correction Model (ECM) to know the convergence of the equilibrium path. The bound test results verified the existence of a long-run association, and the empirical findings confirmed that Chinese FDI has a significant and positive impact, while climate change and CO 2 emissions has negative impact on the agricultural growth of Pakistan both in the short-run and long-run. Granger Causality test results revealed that variables of interest exhibit bi-directional and uni-directional causality. The sector-wise flow of FDI reveals that the agriculture sector of Pakistan has comparatively received a less amount of FDI than other sectors of the economy. Based on the findings, it was suggested to the Government of Pakistan and policymakers to induce more FDI in the agriculture sector. Such policies would be helpful for the progress of the agriculture sector as well as for the economic growth of Pakistan.

Keywords: agricultural growth; Chinese FDI; climate change; carbon emissions; ARDL (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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