Macroeconomic Determinants of CO₂ Emissions in Pakistan: The Role of Economic Growth

Zartashia Hameed, Zayeem Ul Haq and Laiba Batool

Sustainable Business and Society in Emerging Economies, 2025, vol. 7, issue 4, 879-892

Abstract: Purpose: This study examines how economic growth, foreign direct investment (FDI), trade openness, and tourism expenditure relate to carbon dioxide (CO₂) emissions in Pakistan.Methodology: Annual time-series data from 2000 to 2019 were used. Using the Autoregressive Distributed Lag (ARDL) bounds testing approach, the research explores short and long-run interactions among the variables under consideration.&Findings: The results indicate that FDI, economic growth, and trade liberalization are major factors causing an increase in CO₂ emissions in the long run, while tourism expenditure has a reducing effect on pollution. The results provide evidence for the early stage of the Environmental Kuznets Curve (EKC) hypothesis, indicating that Pakistan's growth path remains environmentally unsustainable. The positive link between FDI and emissions is consistent with the Pollution Haven Hypothesis, which posits that areas with weak environmental regulation are attractive to pollution-intensive investment.Implications: Consequently, the study lays out policy directions that prioritize the use of renewable energy, green investment screening for FDI, sustainable trade, and the eco-tourism sector

Keywords: Foreign Direct Investment (FDI); Tourism Expenditure; Economic Growth; Trade Openness; CO₂ Emissions (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:src:sbseec:v:7:y:2025:i:4:p:879-892

DOI: 10.26710/sbsee.v7i4.3629

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