An (a)symmetric analysis of the pollution haven hypothesis in the context of Pakistan: a non-linear approach

Abstract

This work re-investigates the pollution haven hypothesis in the context of Pakistan for the time span 1975–2016 by employing a non-linear autoregressive distribution lag (NARDL) approach. The empirical findings validate an symmetric association between FDI inflow and CO2 emissions in both the short and long run. Further, agriculture has an insignifancant positive impact on CO2 emissions, while trade oppenness and population growth have significant negative impacts on CO2 emissions in both the short and long run. Morover, gross domestic product (GDP) per capita has significant positive, while GDP per capita squared has significant negative, effects on CO2 emissions in the short and long run, hence confirming the environmental Kuznets curve hypothesis. Findings overall confirm the applicability of both the pollution haven and EKC hypotheses in Pakistan. The government should focus on FDI inflow, because the adoption of clean technologies by foreign firms to invest in Pakistan is crucial to curtailing CO2 emissions.

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