Effect of CO2 Emissions, Human Capital, Foreign Direct Investment, and Trade Openness on Economic Growth in Pakistan

Human capital and environmental degradation are critical factors influencing economic growth. This study analyses the relationship between these factors, foreign direct investment, and trade openness in shaping Pakistan's economic trajectory from 1990 to 2020. The findings of ARDL model and ADF test demonstrate that trade openness, foreign direct investment, and human capital positively impact economic growth. However, the interplay of CO2 emissions with human capital negatively impacts growth. The findings underscore the dual function of human capital in enhancing economic success and environmental standards. Policymakers must mitigate the adverse externalities of environmental degradation to optimize the advantages of human capital and foster sustainable economic development.