AN ARDL ANALYSIS OF TRADE OPENNESS AND TECHNOLOGICAL INNOVATION: A DIVERSE BLESSING FOR ENVIRONMENTAL SUSTAINABILITY IN PAKISTAN

Abstract

The study investigates the impact of trade openness and technological innovation on environmental sustainability in Pakistan from 1990 to 2020. In this study, Augmented Dickey Fuller and Phillips Perron Tests for unit root, ARDL bound test approach for long run and error correction model test for short run analysis were applied. The empirical findings of the study indicate that technological innovation exerts meaningful impact on environmental sustainability in the short run and the long run scenario. Moreover, a 1% increase in technological innovation causes a 0.000001 % increase in CO₂ emissi0n in the l0ng run and a 0.0000024 % in the short run. Also, the significant positive effect of trade openness on environmental degradation was observed, where a 1% increase in trade openness led to 0.005 % increase in CO₂ emission in the long run.   At end, the energy consumption adds more pollution in the environment of Pakistan in long run only and the short run results of population and environmental degradation are positive and significant in Pakistan. The policy implications can be suggested to the government of Pakistan in revising energy policy and focusing on green energy sources to attain environmental sustainability. Furthermore, government must refine its trade policy that reduce the bad effects on carbon emissions in Pakistan, such as focusing on green industrialization through research and development.