The Remittance Paradox: Balancing Economic Growth and Environmental Sustainability in Pakistan

Abstract

This study examines the dynamic impacts of personal remittances and foreign direct investment (FDI) on CO2 emissions in Pakistan from 1989 to 2021. Using the nonlinear asymmetric autoregressive distributed lag (ARDL) technique; we investigate the asymmetric effects of remittances and FDI on environmental degradation. Our findings suggest that an increase in personal remittances decreases CO2 emissions, while an increase in FDI boosts CO2 emissions. The results also indicate that GDP is a significant driver of environmental pollution. Furthermore, the study reveals that renewable energy consumption has a negative impact on CO2 emissions, highlighting the importance of transitioning to cleaner energy sources. The study's findings have important policy implications for Pakistan's pursuit of sustainable development and environmental sustainability, emphasizing the need for policymakers to balance economic growth with environmental concerns. The results of this study can inform the development of effective environmental policies and strategies to mitigate the negative impacts of remittances and FDI on the environment.