Investigating the causal relationship between transport infrastructure, economic growth and transport emissions in Pakistan

Abstract

Transport infrastructure plays an important role in the economic growth and development of a country. Despite the many advantages of transport infrastructure, it also has severe consequences for the environment as the usage of fossil fuels result in the emissions of CO2 gas. This research investigates the causal relationship between economic growth, transport infrastructure, transport sector fuel consumption, and carbon emissions from transport in Pakistan over a period of 1971–2017. The results suggest a short-term causality running from transport infrastructure, economic growth, and fuel consumption to CO2 emissions, implying a rise in emissions as a result of economic growth and improvement of infrastructure. The results also exhibit that, in the long run, a bidirectional relationship exist between economic growth and infrastructure. Also, a unidirectional causality exists from economic growth, infrastructure and consumption to emissions. Hence, economic growth leads to an increase in infrastructure and emissions with feedback. The results of this research provide valuable insight for the country as an investment of around US $ 11 billion is made to the development and improvement of transport infrastructure in the context of China Pakistan Economic Corridor aiming to achieve growth through transport investments. The results suggest an increase in emissions in a country which is already suffering from climate change. Therefore, policies need to be developed which while encouraging infrastructure development, also focus on the protection of the environment, and control emissions.