The role of Financial Development and Technological Innovation towards Sustainable Development in Pakistan: Fresh insights from consumption and territory-based emissions

Abstract

• Inspecting financial development, economic globalization and technological innovation with consumption and territory-based emissions. • Employed novel dynamic autoregressive distributed lag (ARDL) model. • Frequency domain causality is applied for the short-medium and long-run links. • Financial development and economic globalization have a positive effect on the environment. • Technological innovation reduces consumption and territory-based emissions. In the contemporary world, environmental problems are a major human concern. The status of the environment and its management are prerequisites for every country's sustainable development. Following the Paris Climate Summit (COP21), Pakistan has amplified its efforts to address environmental issues. In this pursuit, this study aims to provide a new perspective by examining the impact of economic globalization, financial development, energy use, economic development and technological innovation with consumption and territory-based emissions from 1990Q1 to 2019Q4 in Pakistan. The study used Dynamic Autoregressive-Distributed Lag (ARDL) simulations and Frequency Domain Causality (FDC) methods. The empirical evidence reveals that financial and economic development stimulate both consumption and territory-based emissions in the short and long run. However, energy use intensifies consumption and territory-based emissions only in the long run. Also, in the short-run economic globalization adversely affects consumption and territory-based emissions while in the long run rises just consumption-based emissions. However, technological innovations decrease both emissions substantially in the long term. Finally, FDC outcomes endorsed the hypothesis. The study suggests that policymakers discourage non-renewables and increase renewable energy use to decrease consumption and territory-based emissions. The results would help Pakistan reach more eco-friendly energy technologies and a more sustainable energy environment to accomplish SDG 7 and 13 goals.