Foreign Direct Investment, Trade Openness, CO2 Emission and Economic Growth in Pakistan: Bi-variate Co-integration

Abstract

This study is designed to investigate the relationship between CO2 emission and various economic indicators such as economic growth, foreign direct investment, trade openness, domestic investment and labor force in Pakistan. The study covers the period for 1972-2017. To achieve the objective of consistency in the estimation results, the study applies different estimation techniques such as the Augmented Dickey-Fuller Test (ADF) was used to test the unit root and Johansson co-integration test (JCT) used to test the long-run relationship among the variables. The results of the study show that CO2emission has long-run relation with FDI, DI and TO. CO2emission has causality with DI. The results of the study suggest that the government would pay attention to increase industrialization in the country that become the cause to increase domestic investment and also attract foreign investment in the country which increases the productivity and produce skilled labor.