Examining the Role of Remittances, Technological Innovation, and Foreign Direct Investment on Environmental Quality in Pakistan: Fresh Evidence from a Novel Dynamic ARDL Simulation Approach.

Abstract

This study investigates the effect of remittances, financial sector development, and technological innovation, while also taking into account the foreign direct investment and economic growth on environmental quality by using its more comprehensive proxy, ecological footprint, and by focusing on yearly data from 1990 to 2021 in the context of Pakistan. To this purpose, we used the autoregressive distributed lag (ARDL) cointegration technique with the dynamic simulated ARDL approach. Further, the study also used the Frequency Domain Causality (FDC) test to investigate the potential causality between research variables at various time frequencies. The results of cointegration test show a long-term cointegration association among the considered variables. Further, the empirical findings demonstrate a negative association between remittances and ecological footprint, thus suggesting that remittances betters the environmental quality. Similarly, technological innovation enhance the environmental quality of Pakistan by lowering the level of ecological footprint. Besides, financial development, economic growth, and foreign direct investment degrade environmental health by rising the ecological footprint. Finally, the outcomes of FDC analysis indicate that the ecological footprint is granger caused by the considered research variables. These findings can help government and policymakers to develop effective policies to reduce environmental degradation and achieve long-term socioeconomic development.