Influence of Military Expenditures, Industrial Growth, and Financial Development on Economic Growth, and Environment in Heterogeneous Political Regimes in Pakistan

Faqeer Muhammad (), Anwar Khan (), Jamal Hussain (), Tasawar Baig () and Saadia Baig ()
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Faqeer Muhammad: Karakoram International University
Anwar Khan: Southwestern University of Finance and Economics
Jamal Hussain: Karakoram International University
Tasawar Baig: Karakoram International University
Saadia Baig: Karakoram International University

Journal of the Knowledge Economy, 2024, vol. 15, issue 1, No 99, 2439-2459

Abstract: Abstract This study attempted to measure military expenditures, industrial growth, and financial development on economic growth and environmental degradation in two heterogeneous political regimes, i.e., democracy and autocracy in Pakistan, over 1971–2014. For this purpose, we have adopted a bound cointegration approach that can account for structural breaks (Gregory and Hansen), the autoregressive distributed lags (ARDL) model, and the spectral Granger causality approach of Breitung and Candelon to conclude the study with rigorous outcomes. Our results concluded that the chosen variables are cointegrated for the long run in the existence of structural breaks. Similarly, the short-run effects have shown that military expenditures are escalating the environmental emissions and economic growth. On the other hand, the influence of finance is positive and significantly contributing to environmental emissions. While in the long-run, the results revealed that democratic governments are more concerned about environmental quality as the relationship with environmental degradation based on CO2 emissions (E) is negative. However, the dictatorship regime has a positive and significant influence on environmental degradation in Pakistan. To overcome the adverse effects of the growth, the research findings suggest adopting environmentally friendly policies in Pakistan.

Keywords: Military expenditures; Industrial growth; Economic growth; Environmental sustainability; Heterogeneous political regimes; Pakistan (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s13132-023-01261-5

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