Symmetric and asymmetric impact of oil price, FDI and economic growth on carbon emission in Pakistan: Evidence from ARDL and non-linear ARDL approach

Several studies have examined the impact of economic growth on carbon emission; however, the symmetric and asymmetric impact of oil price along with FDI on carbon emission has not studied in the case of Pakistan. For this purpose, the long and short-run impact of per capita income, FDI, and oil price on carbon emissions investigated by employing the ARDL and non-linear ARDL cointegration methodology, along with Granger causality in the context of Pakistan for 1971-2014. This study confirms the EKC hypothesis for Pakistan under both methodologies, whereas symmetric results show that economic growth and FDI intensify carbon emission in both the long and short-run, while oil price increase emission in the short-run and reduces emission in the long-run. Whereas asymmetric results in the long-run show that an increase in oil price reduces emissions and decrease in oil price intensify emissions. The causality analysis also supports the above findings and suggests a feedback effect between economic growth and carbon emission in Pakistan. This study provides implications for policymakers, where the descending flow of FDI allows limited space to Pakistan in FDI selection; however, the presence of emission convergence and adoption of carbon pricing may facilitate Pakistan in achieving its environmental targets. While diversifying the overall energy mix towards more renewable/clean energy along with formulating favorable policies for the adoption of renewable energy like solar by the industrial and residential consumers can further reduce the overall emission levels. (C) 2020 Elsevier B.V. All rights reserved.