Greening Growth: The Environmental Implications of Technology Innovation, Green Finance, and Foreign Direct Investment in Pakistan

Abstract

This research delves deeply into the intricate interplay among technology innovation, green finance, foreign direct investment (FDI), GDP, and their collective impact on the environment. Employing the Autoregressive Distributed Lag (ARDL) model over the timeframe spanning 1990 to 2021, the study aims to unveil nuanced insights into the intricate relationships that shape the environmental landscape. The study's findings offer an insightful perspective on the connections between these pivotal variables and their repercussions on environmental metrics. Specifically, the outcomes reveal a negative correlation between technology innovation, green finance, and CO2 emissions, as well as ecological footprints. This suggests a noteworthy linkage between technological advancements and the adoption of sustainable financial mechanisms with reduced carbon emissions and a less burdensome ecological footprint. These trends underline their potential to contribute positively to the well-being of the environment. In contrast, the study uncovers a positive correlation between FDI, GDP, and both CO2 emissions and ecological footprints. This observation underscores the intricate dynamics at play, wherein foreign direct investment and economic growth appear to exert pressures that escalate carbon emissions and environmental impact. This intricate relationship brings into focus the potential trade-offs between advancing economic development and preserving the environment, necessitating a thoughtful equilibrium for sustainable progress. The implications of these revelations hold substantial weight for policymakers and government officials in Pakistan. By illuminating the nuanced interconnections among technology innovation, green finance, FDI, and environmental indicators, this research equips decision-makers with invaluable insights to formulate effective policies.