Economic Growth, Industrialization, and CO2 Emissions in Pakistan: Insights from ARDL Modeling

Authors

  • Syed Laulak Haider Quaid-i-Azam University, Islamabad, Pakistan.
  • Wasif Mehdi Universitas Islam International Indonesia (UIII), Indonesia.
  • Syed Muhammad Mustafa Dongbei University of Finance and Economics, China.
  • Syed Waqar Abbas Karakoram International University, Gilgit, Pakistan.

DOI:

https://doi.org/10.52131/joe.2024.0603.0231

Keywords:

CO2 Emissions, Economic Growth, Environmental Kuznets Curve (EKC), Industrialization, ARDL, Pakistan

Abstract

This study explores how industrialization, economic growth (measured by GDP per capita), and CO? emissions have interacted in Pakistan over nearly five decades, from 1974 to 2022. It also considers the influence of population growth and foreign direct investment (FDI) on this relationship. To analyze the data, the ARDL model was used, ensuring the reliability of the results by confirming stationarity with the Augmented Dickey-Fuller (ADF) test. The results showed that in the long run, a 1% increase in GDP per capita and FDI inflows results in respective increases in CO? emissions of 0.33% and 0.061%. Still, a 1% rise in industrial activity lowers CO? emissions by 0.34%. In the short run, a 1% rise in GDP per capita and FDI reduces CO? emissions by 0.21% and 0.020%, respectively. Conversely, a 1% increase in industrial activity causes emissions of 0.29%. These findings are in line with the Environmental Kuznets Curve (EKC) theory, which holds that CO? emissions initially rises when a nation industrializes but as the technology advances and more rigorous rules are followed, the level of CO? emissions decreases. Based on these results, policies emphasizing investments in renewable energy, strict environmental rules enforced, and support of clean technologies and sustainable industrial practices are suggested.

Author Biographies

Syed Laulak Haider, Quaid-i-Azam University, Islamabad, Pakistan.

MS Student, School of Economics

Wasif Mehdi, Universitas Islam International Indonesia (UIII), Indonesia.

MS Student, Faculty of Economics and Business

Syed Muhammad Mustafa, Dongbei University of Finance and Economics, China.

MS Student, School of Tourism and Hotel Management

Syed Waqar Abbas, Karakoram International University, Gilgit, Pakistan.

Department of Management Sciences

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Published

2024-08-24

How to Cite

Haider, S. L., Mehdi, W., Mustafa, S. M., & Abbas, S. W. (2024). Economic Growth, Industrialization, and CO2 Emissions in Pakistan: Insights from ARDL Modeling. IRASD Journal of Economics, 6(3), 664–676. https://doi.org/10.52131/joe.2024.0603.0231