Impact of Globalization, Energy Consumption, Economic Growth, Urbanization and Trade Openness on Environmental Degradation: Evidence from Pakistan

This study investigates the impact of globalization, energy consumption, economic growth, urbanization, and trade openness on environmental degradation in case of Pakistan. The dynamic autoregressive distributed lag (DARDL) technique was applied to measure the short- and long-term estimates, which are robust and have higher predictive power compared to the conventional ARDL technique with a dataset that spans from 1980 to 2023 for Pakistan. The empirical findings confirm a significant long-run cointegrating relationship among the variables under investigation. Specifically, globalization and trade openness are found to exert a significant negative impact on CO2 emissions, suggesting their potential role in fostering environmental amelioration. Conversely, energy consumption and economic growth demonstrate a significant positive impact on CO2 emissions, indicating their contribution to increased environmental degradation. Notably, urbanization does not show a significant relationship with CO2 emissions, a finding attributed to Pakistan’s inefficient and environmentally unfriendly urban infrastructure, despite a substantial 2.93 percent annual rate of urbanization. Furthermore, the widely posited Environmental Kuznets Curve (EKC) hypothesis is not supported by the data; instead, economic growth appears to be associated with an exponential increase in CO2 emissions. The findings offer crucial policy insights for sustainable development initiatives for Pakistan and generally for developing nations.