Open AccessTrade Liberalization, Economic Growth and Environmental Quality Nexus: An Empirical Evidence from Pakistan
Author(s) -
Noreen Safdar,
Hina Ghaffar,
Fatima Farooq,
Malka Liaquat
Publication year - 2020
Publication title -
journal of accounting and finance in emerging economies
Language(s) - English
Resource type - Journals
eISSN - 2519-0318
pISSN - 2518-8488
DOI - 10.26710/jafee.v6i4.1463
Subject(s) - kuznets curve , economics , openness to experience , environmental quality , nexus (standard) , free trade , environmental degradation , international economics , natural resource economics , economic growth , ecology , psychology , social psychology , computer science , biology , embedded system
The linkage between trade liberalization, environmental quality and economic growth is becoming an increasingly popular issue in environmental economics in recent decades. In view of Pakistan’s position as one of the main contributors to carbon dioxide emissions in Asia, it is vital to identify the main determinants of carbon dioxide emissions. The present study empirically investigates the long run association among trade liberalization, environmental quality and economic growth along with other variables energy use and capital labor ratio in Pakistan for the period 1980-2018. The results also indicate that there is inverted U shape relationship between economic growth and carbon dioxide emissions, hence the environmental Kuznets curve hypothesis is valid in Pakistan during 1980-2018. Trade openness has a negative significant impact on carbon dioxide emissions. Capital labor ratio effects and energy use have a direct relationship with carbon dioxide emissions. The results show that environmental quality is first declined by economic growth but with further increase in growth, environmental quality is improved which supports the existence of Environmental Kuznet curve hypothesis in Pakistan during that time span. Furthermore, results also show that trade openness has positive significant impact on environmental quality.