Assessing the Environmental Consequences of Financial Development, Technology Innovation, and Foreign Direct Investment in Pakistan

Abstract

The current article scrutinizes the interplay amid financial development, technological innovation, foreign direct investment (FDI), GDP growth, and their collective impact on the environment within the context of Pakistan. Employing the Autoregressive Distributed Lag (ARDL) methodology, the study spans the time frame of 1990 to 2021. Notably, the research simultaneously employs three distinct proxies for measuring financial development and uncovers a consistent negative correlation between each proxy and environment. Moreover, the findings underscore the adverse environmental repercussions of foreign direct investment and economic expansion. In contrast, the influence of technological innovation exhibits a contrasting trend, displaying a negative relationship with environmental degradation. This study contributes to a nuanced understanding of the intricate relationships between economic factors and environmental health in Pakistan, offering insights that could inform future policy decisions in pursuit of sustainable development.