The Effect of Economic Growth, Foreign Direct Investment, and Energy Use on Environment Degradation: Evidenced from ASEAN Nations

  • Baserat Sultana University of Wah
  • Syeda Nida Raza University of Wah
  • Kinza Rana University of Wah
  • Aaqib Qayyum University of Wah
Keywords: ASEAN countries, ARDL/PMG, Carbon Emission, Foreign Direct Investment, EKC theory, GDP growth

Abstract

Literature evidenced that environmental degradation creates hurdles in economic development. So, this study highlights the leading macroeconomic indicators which affect the environment and investigates the nexus among FDI, energy utilization, economic development, and environmental pollution for ASEAN nations from 1990 to 2018. Panel Autor Regressive Distributive lag (ARDL) methodology is used to examine the impact of economic growth, foreign direct investment and energy use on environment degradation. Different panel unit roots (Im, Pesaran and Shin W-stat, Levin, Lin & Chu, ADF - Fisher Chi-square, PP - Fisher Chi-square) tests are applied to confirm the intergradation order, and results confirm that there exits I (0) and I(1) order of intergradation. There exists a unidirectional relationship between energy consumption and carbon emission of CO2 and CO2 to foreign direct investment in the long run. While in the short run, there does not exist any relationship. The results confirm the existence EKC hypothesis, which confirms there exits negative and positive effects of GDP and square of GDP on carbon emission. Hence this study concludes that its essential to develop some strategies and policies to guarantee economic stability. Additionally, reliable and sustainable power resources should be used for positive environmental changes. The carbon dioxide emission should be reduced for the GDP growth by utilizing different eco-technologies and renewable energy resources, which can nullify the effect of emission of CO2 to maintain the greenhouse environment.

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Author Biographies

Baserat Sultana, University of Wah

Lecturer,

Department of Economics,

University of Wah, Pakistan

Syeda Nida Raza, University of Wah

Research Assistant,

Department of Economics,

University of Wah, Pakistan

Kinza Rana, University of Wah

Visiting Lecturer,

Department of Economics,

University of Wah, Pakistan

Aaqib Qayyum, University of Wah

Department of Economics,

University of Wah, Pakistan

Published
2021-09-30
How to Cite
Sultana, B., Raza, S. N., Rana, K., & Qayyum, A. (2021). The Effect of Economic Growth, Foreign Direct Investment, and Energy Use on Environment Degradation: Evidenced from ASEAN Nations. Pakistan Journal of Humanities and Social Sciences, 9(2), 114 - 124. https://doi.org/10.52131/pjhss.2021.0902.0118
Section
Articles