Investigating the nexus among sulfur dioxide emission, energy consumption, and economic growth: empirical evidence from Pakistan.

Khuda Bakhsh,Tauqeer Ahmad,Qasir Abbas,Tanzila Akmal

doi:10.1007/s11356-021-15898-9

Abstract

Developing countries like Pakistan majorly depend on fossil fuels for achieving higher economic growth but have sloppy environmental rules and regulations in order to attract foreign direct investment (FDI). As a result, energy consumption is considered the primary cause of environmental degradation. Besides CO2 emission, environmental degradation is also associated with emission of sulfur dioxide (SO2). The purpose of this study was to investigate the relationship among SO2 emissions, energy consumption, economic growth, and FDI in Pakistan. By applying the 3SLS method, study has estimated the scale effect, composition effect, and technique effect. The scale effect and technique effect findings indicated that capital stock, FDI, and SO2 emissions all had a significant impact on GDP. When the capital accumulation effects of FDI were considered, the relationship between FDI and stock of capital was found to be positive. According to the technique effect results, FDI, population density, and energy consumption were all significantly related to SO2 emissions. The study came to a conclusion with significant policy implications.

Highlights

Rapid economic growth in developing countries like China, India and Pakistan has led to increased energy consumption
In order to explore the empirical relation among foreign direct investment (FDI), energy consumption, SO2 emission and economic growth, annual data was used for the period of 1975 to 2015.We were interested to consider the relationship between SO2 emission, energy consumption and economic growth at different sector levels
The present study explored relations of FDI, SO2 emission, energy use and economic growth using 3SLS in Pakistan

Summary

Introduction

Rapid economic growth in developing countries like China, India and Pakistan has led to increased energy consumption. Developing countries heavily depend on fossil fuels for energy generation and consumption. The massive use of the energy especially from fossil fuels causes severe environmental degradation. Emitters such as CO2, SO2 and particulate matter from energy consumption lead to air pollution. Other factors contribute in pollution emission, fossil fuel consumption causes the larger amount of pollution emissions. Yilanci et al (2020) assert that long-term impact of energy consumption leads to pollution emission. Considering SO2 emission, it depends on the sulfur content of the fossil fuels, in addition to the sectoral processes leading to pollutant emission. SO2 oxidizes in the atmosphere to form aerosol thereby influencing climate

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