The Effect of Tourism and Foreign Direct Investment on Environment: Time Series Evidence from Pakistan

Abstract

The chief focus of the existing research work is to scrutinize the effects of Tourism and Foreign Direct Investment (FDI) on Environment in case of Pakistan. For this motive, the research work put to use data of annual time series since 1990 till 2021. In the affairs of dependent and independent variables, the make use of CO₂ Emission as dependent and Tourism, Foreign Direct Investment, GDP, GDP2, Renewable and Non-Renewable Energy are utilized as independent variables. The study used Ordinary Least Square (OLS) procedure. The experiential outcomes illustration the optimistic and statistically important effect of Tourism, GDP and Non-Renewable on the CO₂ Emissions in Pakistan. Other independent variables like Foreign Direct Investment, Renewable Energy and GDP² have an adverse and significant effect on CO₂ Emissions in Pakistan. The study also supports the presence of Environmental Kuznets Curve Hypothesis (EKC) in Pakistan. The results of Granger Causality Test Indicate that Bidirectional or Two way Causality among Tourism and CO₂, while no Causal relationship between FDI and CO₂