An Historical Review of International Trade and CO2 Emissions in Pakistan: A Quantitative

Abstract

Environmental protection has become an international issue, reflecting widespread concern about environmental degradation. Researchers have emphasized the importance of the environment in trade policy debates. The focus of this study is to explore the relationship that is present between trade openness and the quality of environment in Pakistan. This research investigates the famous nexus between trade and the environment. The study uses data from 1990-2021 for analysis. The emissions of CO₂ (Metric tons per capita) serves as the proxy of Environmental quality as the dependent variable. Empirical analysis is done by applying Autoregressive Distributed Lag (ARDL) time series econometric technique. Trade openness is the main independent variable, whereas population, foreign direct investment, and non-renewable energy are used as control factors. The results obtained from co-integration test prove a long term relationship between CO₂ emissions and trade openness. A study indicated that increased commercial openness leads to an increase in CO₂ emissions, which promotes environmental degradation in Pakistan. It is proposed that trade policies take environmental protection into account.