Does macroeconomic instability cause environmental pollution? The case of Pakistan economy

Unleashing sustainability in uncertain times: Can we leverage economic complexity, uncertainty, and remittances to combat environmental degradation?

Rapid economic growth and human activities have seriously damaged the environment and hindered the achievement of Sustainable Development Goals (SDGs). Hence, this study aims to explore the impact of economic complexity, uncertainty, and remittance on environmental degradation in 134 countries from 2000 to 2022. In addition, it examines whether uncertainty moderates the relationship between remittance and environmental degradation. Two proxies (ecological footprint and CO2) were used to measure environmental degradation. The analysis was conducted using a cross-sectional dependency test, second-generation unit root test, and panel quantile regression. The results revealed that economic complexity significantly and positively impacted environmental degradation, while uncertainty and remittance significantly and negatively impacted environmental degradation. Furthermore, uncertainty weakened the negative relationship between remittance and environmental degradation. Accordingly, this paper discusses various recommendations and policy implications regarding economic complexity, uncertainty, remittance, and environmental degradation.

Does environmental quality react asymmetrically to unemployment and inflation rates? African OPEC countries' perspective

Environmental degradation, inflation, and unemployment are unquestionably among the current global issues. However, there has not been an in-depth investigation of how unemployment and inflation rates affect environmental quality, particularly when considering the asymmetric scenario in oil-producing countries. This gap in the literature motivated this study to investigate how the environment (proxied by CO2 emissions) reacts to asymmetric shocks in inflation and unemployment rates using the panel NARDL model methodology. This study also examines whether the environmental Phillips curve (EPC) hypothesis holds true in the context of African OPEC countries over the period 1990 to 2019. The study presents three interesting findings. First, CO2 emissions are adversely associated with unemployment and inflation rates, meaning that protecting a healthy environment would have to come at the expense of two undesirable outcomes: losing employment and a decline in purchasing power. Second, the asymmetry analysis demonstrates that both negative unemployment and positive inflation shocks have a larger effect on CO2 emissions than the opposite scenario. Finally, long-term evidence exists to support the presence of the EPC in these countries.

Exploring the nexus between energy consumption, income inequality and poverty, economic growth, and carbon dioxide emission: evidence from two step system generalized method of moments

The concern of environmental degradation, poverty, and income inequality remains a priority in achieving sustainable development goals. Countries are trying to reduce income inequality, alleviate poverty, and reduce environmental degradation which needs special attention. Consequently, this study explores the effect of income inequality, poverty, and energy consumption on carbon dioxide emission in the Belt and Road Initiative countries from 1996 to 2018. By employing the generalized method of moments, the findings show that income inequality, poverty, and energy consumption significantly increase carbon dioxide emission and lead to environmental degradation, while access to electricity significantly raises environmental quality. Economic growth positively affects carbon dioxide emission; however, the environmental Kuznets curve is valid. Income inequality exerts a moderating effect on carbon dioxide emission via per capita economic growth that reduces environmental degradation in the Belt and Road Initiative countries. The results of this study give important policy implications for the Belt and Road Initiative countries.

Volatility in natural resources, economic performance, and public administration quality: Evidence from COVID-19

The recent Covid-19 pandemic outbreak caused a global economic recession and promoted uncertainty in the natural resources. Also, this uncertainty is linked with the demand and supply of natural resources such as oil and natural gas, which is a substantial factor of industrial and economic activities. Declining natural resource demands substantially drop such activities that adversely affect economic performance. This attracts the attention of policy-makers and governors to efficiently tackle the issue. This study investigates the association of natural resources volatility, global economic performance, and public administration in earlier and Covid-19 pandemic peak periods. The study covers the period from 1990 to 2020 for the global data. The empirical findings of the cointegration test suggested that the variables are cointegrated. This study utilizes three long-run estimators, i.e., fully modified ordinary least square (FMOLS), dynamic OLS (DOLS), and Canonical Cointegrating Regression (CCR). The empirical findings suggest that natural resources volatility (TNR) negatively and significantly affect global economic performance. While natural gas rents, oil rents, and public administration quality (QPA) promote global economic performance. Besides, the results also indicate that the interaction of QPA and TNR enhances economic performance. This study demonstrates that volatility in natural resources is detrimental to global economic performance. However, improved public administrative quality could play a significant role in transforming the negative influence. of natural resources volatility into a positive effect. The findings are robust as validated by Robust regression. This study provides some practical policy insights for the governors and policy-makers to tackle the mentioned issues.

Analysis of income inequality and environmental pollution in BRICS using fresh asymmetric approach

With rapid economic growth, BRICS is facing enormous burdens of carbon emission and severe issues of income inequality. However, behind this economic success, the BRICS economies also face few thoughtful challenges to improve environmental quality by catching up the sustainable development goals. Consequently, the existing empirical research is concerned with the dynamic links between income inequality and CO₂ emissions by using the novel nonlinear ARDL approach, but small attention has been paid to the BRICS in literature. Therefore, we observed that a negative and positive change in income inequality has positive effect on CO₂ emissions in Russia and South Africa in the long run, although a positive change in income inequality has positive effects on CO₂ emissions in Brazil, Russia, and China, while a negative change in income inequality has negative effect on CO₂ emissions in India, Brazil, and Russia in the short run. Hence, the findings value specific attention from policymakers in BRICS economies.

Asymmetric effects of militarization on economic growth and environmental degradation: fresh evidence from Pakistan and India

To examine the asymmetric effects of militarization on economic growth and environmental degradation, this empirical research analyzes annual data of Pakistan and India over the period 1985-2018 using the NARDL econometric model. The empirical results show significant positive militarization effects on economic growth, while non-militarization also shows positive effects on the economic growth in Pakistan and India. Estimation showed that a 1% increase in militarization (non-militarization) led to 8.818% (3.849%) increase in GDP growth, whereas a 1% increase in militarization (non-militarization) decreased carbon emissions by - 1.034% (- 0.225%) in the long run in Pakistan, while militarization has also decreased the carbon emissions - 0.337% in India in the long run. The relationship between militarization and economic growth has an asymmetry in Pakistan and India in the short and long run, while asymmetry also exists between militarization and CO₂ in Pakistan and India in the short and long run. Our findings offer significant policy implications for promoting economic growth and environmental quality in Pakistan and India.

Asymmetric effects of inflation instability and GDP growth volatility on environmental quality in Pakistan

This study inspects the empirical association between inflation instability, GDP growth volatility, and the environmental quality in Pakistan, covering the period 1975-2018 by using an asymmetric autoregressive distributed lag (ARDL) methodological approach. The asymmetric ARDL results document that positive and negative shocks of inflation instability have different effects on environmental quality. Negative shocks of inflation instability have a positive influence on carbon dioxide emissions (CO2) and nitrous oxide emissions (N2O), while positive shocks of inflation instability have insignificant effects in the long run. Asymmetric findings also suggest that positive and negative fluctuations in GDP growth volatility affect CO2 and N2O emissions differently, while they have insignificant results on methane emissions (CH4) in the long run. Additionally, in the short run, positive and negative shocks of inflation instability and GDP growth volatility behave differently in terms of their impact on pollution emissions. Based on these findings, the study opens up innovative intuitions for policymakers to support a robust role of economic stability in attaining targets relevant to pollution reduction.

Symmetric and asymmetric impact of oil price, FDI and economic growth on carbon emission in Pakistan: Evidence from ARDL and non-linear ARDL approach

Several studies have examined the impact of economic growth on carbon emission; however, the symmetric and asymmetric impact of oil price along with FDI on carbon emission has not studied in the case of Pakistan. For this purpose, the long and short-run impact of per capita income, FDI, and oil price on carbon emissions investigated by employing the ARDL and non-linear ARDL cointegration methodology, along with Granger causality in the context of Pakistan for 1971-2014. This study confirms the EKC hypothesis for Pakistan under both methodologies, whereas symmetric results show that economic growth and FDI intensify carbon emission in both the long and short-run, while oil price increase emission in the short-run and reduces emission in the long-run. Whereas asymmetric results in the long-run show that an increase in oil price reduces emissions and decrease in oil price intensify emissions. The causality analysis also supports the above findings and suggests a feedback effect between economic growth and carbon emission in Pakistan. This study provides implications for policymakers, where the descending flow of FDI allows limited space to Pakistan in FDI selection; however, the presence of emission convergence and adoption of carbon pricing may facilitate Pakistan in achieving its environmental targets. While diversifying the overall energy mix towards more renewable/clean energy along with formulating favorable policies for the adoption of renewable energy like solar by the industrial and residential consumers can further reduce the overall emission levels.

Air pollution, demographic structure, and the current account: an extended life-cycle model

Air pollution has an important impact on both human health and sustainable economic development. The relationship of the current account, which is an important carrier of international economic activity, with air pollution has rarely been discussed by scholars. This paper aims to investigate how air pollution affects the current account and the mechanism of this effect. We conducted a theoretical analysis of the relationship between air pollution and the current account by adopting an extended form of the life-cycle model. Then, we used panel data (2000-2017) from 159 countries and the panel double fixed-effect method to empirically test the theoretical outcomes. We found that an increase in the degree of air pollution in a country leads to the deterioration of the domestic current account. In addition, air pollution changes the current account by affecting the demographic structure, following the "air pollution→demographic structure→current account" mechanism. The study also tested the robustness of the benchmark results by solving endogeneity problems, subsample regression and controlling measurement errors. Our findings are an important expansion and innovation for the research about the current account and have important implications for external economic equilibrium and sustainable economic development.

On the asymmetric effects of premature deindustrialization on CO2 emissions: evidence from Pakistan

In this modern era, environmental pollution is the biggest problem attached to industrialization. This study tries to ensure the relationship between industrialization and CO2 emissions in Pakistan for the time period 1980-2018 by using nonlinear ARDL model while controlling for urbanization, GDP, and human capital variables as a likely factor of CO2 emissions. Our foremost study objective is to examine whether or not the outcome of industrialization on CO2 emissions is symmetric or asymmetric for Pakistan that is one of the core suppliers to CO2 in South Asia, as the emissions were 0.82 million tons in 2018. Our result approves the presence of an asymmetric effect of industrialization shocks on CO2 emissions both in the short run and long run. The results reveal that industrialization increases emissions and deindustrialization decrease emissions, in short as well as long run, in Pakistan. Moreover, our finding also advises that urbanization and GDP variables have exerted a positive impact on CO2 emissions. Based on the findings, some policy suggestions are proposed for Pakistan.

Financial Leverage, Economic Growth and Environmental Degradation: Evidence from 30 Provinces in China

This study seeks to investigate the endogenous relationship between financial leverage, economic growth and environmental degradation in China by employing a the generalized moments method (GMM) panel vector autoregressive (PVAR) approach with a panel of data from China’s 30 provinces over the period 1997–2016. Three key results arise. First, financial leverage can significantly lessen economic growth, while economic growth decreases financial leverage. Second, economic growth provides an important impetus to boost carbon emissions. Finally, carbon emissions have inversely pushed up financial leverage. These results reflect to some extent China’s impressive rate of economic growth, which has been attained via continuously supporting inefficient state-owned enterprises and heavy and polluting industries through bank loans. The results are further supported by the variance decomposition. The findings provide valuable policy implications for deepening financial supply-side structure reform to transform and upgrade China’s real economy. These policy implications are conductive to developing a low-carbon economy.

China-Pakistan Economic Corridor and Its Influence on Perceived Economic and Social Goals: Implications for Social Policy Makers

China-Pakistan Economic Corridor (CPEC) has initiated as a mega project by China and Pakistan to benefit economic growth and free trade. CPEC is in the initial stage, and policymakers and government officials consider CPEC as a “game-changer” for both the countries, as, potentially, it will generate numerous business and employment opportunities for local citizens as well as international outreach. Recently, a plethora of research has discussed both the macro as well as micro level advantages of CPEC, but has only been focused theoretically due to the emerging term. How beneficial the CPEC for a local community, and how it is perceived by the local people is not yet discussed by prior studies. This research fills the gap and examines the potential benefits of CPEC for local citizens of Pakistan. A mixed method approach was adopted to collect the data, as survey through structured questionnaire was conducted with a total of 445 citizens (323 male and 122 female), and a face-to-face interview with 32 citizens (28 male and four female) from the communities living along the CPEC routes. The findings show that, through the development of CPEC, local citizens perceive significant improvement in their lives, particularly the quality of life, better employment opportunities, and poverty reduction, while they have an insignificant perception about environmental protection and quality of education. This research recommends policy makers to build new educational institutions, encourage investors to invest in the industrial sector, and formulate environmental strategies to unleash maximum benefits of CPEC. Moreover, government official and policy makers may create awareness of CPEC projects and their benefits among the communities to get their support.